Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

I investigate special situations, pairs, and index rebalancing trades in Korea.

Korea / Special Sits, Pairs, Index Rebalancing

Cafe24 IPO Book Summary - Valuations & Market Sentiments

Cafe24 IPO Preview (Part 2): Korea's Shopify, But at What Price?

Equity Capital Markets

Cafe24 Corp (042000 KF) IPO price was set at ₩57,000. This is the upper end of the indicative price band, ₩43,000 - ₩57,000. The subscription competition rate reached a 672.71 to 1, which is unusually high for a large-sized IPO. A total of 833 local and overseas institutional investors have participated in this bookbuilding process. Overseas institutions accounted for 29.29% in terms of participating institutions and 30.18% in terms of demand qty.Bookbuilding overviewTotal # of institutions833Total # of shares demanded484,353,794Subscription competition rate672.71 to 1Source: DARTLocal investment FirmsLocal brokerage firmsLocal pension, bank, insurance firmsOthersForeign institutionsInstitutions1282086355244Demand75,695,00013,697,00047,664,000201,123,000146,174,794% (by institution)15.37%2.40%10.32%42.62%29.29%% (by demand)15.63%2.83%9.84%41.52%30.18%Source: DARTA vast majority wanted cafe24 IPO share at above the upper end. In terms of demand qty. %, 80.56% were at above the upper end. In terms of participating institutions, 77.07% placed their demands at above the upper end. If we include those who didn't specify their demand price (these unspecified demands generally mean that they will take Jin Air shares at whatever IPO price), more than 90% (92.97%) will be placed at above the upper end. Undoubtedly, this is super impressive.Price bandInstitutions%Demand%Above upper end64277.07%390,202,00080.56%75-100% of upper end779.24%33,844,0006.99%50-75% of upper end00.00%00.00%25-50% of upper end00.00%00.00%0-25% of upper end00.00%00.00%Median10.12%20,0000.00%75-100% of median10.12%200,0000.04%50-75% of median00.00%00.00%25-50% of median00.00%00.00%0-25% of median00.00%00.00%Lower end or below10.12%1,0000.00%Unspecified11113.33%60,086,79412.41%Total833100.00%484,353,794100.00%Source: DARTBelow is a more detailed result by each price band. It really seems true that nearly everyone (a whopping 99.95% (including those demands in the category of 'unspecified') were placed at ₩57,000 (the upper end) or higher.PriceInstitutionsDemands%&gt; ₩57,000642390,202,000 80.56%₩57,0007733,844,000 6.99%&lt; ₩57,003221,000 0.05%Unspecified11160,086,794 12.41%Total833484,353,794 100.00%Source: DARTBelow two tables show how aggressive each type of investors was in this IPO bookbuilding.Local investment firmsLocal brokerage firmsLocal pension, bank, insurance firmsPrice bandInstitutionsDemandInstitutionsDemandInstitutionsDemandAbove upper end10664,675,0001712,239,0007241,125,00075-100% of upper end157,288,000118,00084,155,00050-75% of upper end00000025-50% of upper end0000000-25% of upper end000000Median0000120,00075-100% of median00001200,00050-75% of median00000025-50% of median0000000-25% of median000000Lower end or below000000Unspecified73,732,00021,440,00042,164,000Source: DARTOthers (local)Foreign institutionsTotalPrice bandInstitutionsDemandInstitutionsDemandInstitutionsDemandAbove upper end296175,432,00015196,731,000642390,202,00075-100% of upper end4921,660,0004723,0007733,844,00050-75% of upper end00000025-50% of upper end0000000-25% of upper end000000Median0000120,00075-100% of median 00001200,00050-75% of median00000025-50% of median0000000-25% of median000000Lower end or below11,0000011,000Unspecified94,030,0008948,720,79411160,086,794Source: DARTA total of 208,007,624 demands, representing a whopping 42.90% of the total demands, carry a lock-up pledge from 15 days to 6 months. Again, this is highly impressive and encouraging.Lock-up obligation6 month lock up41,712,6243 month lock up93,887,0001 month lock up62,651,00015 day lock up9,757,000Total208,007,624% of total demands42.90%Source: DARTWith an IPO price of ₩57,000, cafe24's total capital to be raised in this IPO will amount to ₩51,300,000,000 (₩51.3bil). The stocks will be listed and traded on Feb 8.IPO summaryTotal number of share offerings900,000 shares(100% new rights offering)IPO price₩57,000Total amount to be raised (at ₩57,000)₩51,300,000,000Target valuation (at ₩57,000)₩546.8bilBookrunnersMirae Asset Daewoo Securities Co Ltd (006800 KS)Yuanta Securities Korea (003470 KS)Hanwha Securities Co Ltd (003530 KS)BourseKOSDAQListingFeb 8Source: DART

Cafe24 IPO Bookbuilding Results - Summary & Implications