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[NEWS IN-DEPTH] Competition heats up for Kakao Pay's pre-IPO subscription - YouTube
Channel: Arirang News Center
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This year has been a bumper year for South
Korea's Initial Public Offering market,…
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with a parade of blockbuster
debuts setting new records.
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Amid an influx of liquidity and a
debt-financed retail asset frenzy,…
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cash-rich investors have rushed into
the IPO market looking for quick gains.
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In fact, in the third quarter, the country's
IPO market has been on fire,… with proceeds
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expected to beat that of Hong Kong's
for the first time since 2017.
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Another mega IPO for the South Korean
stock market is just around the corner.
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For that we have our Eum Ji-young in the studio.
Good to have you Ji-young.
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Good Evening Connyoung.
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Ji-young, The fintech company Kakao Pay will debut
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on the country's benchmark KOSPI
next week,… on November third.
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It's affiliated of course with South Korea's
largest smartphone chat application,… Kakao.
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It seems that bidding for these shares was fierce.
Tell us how the pre-IPO bidding unfolded today.
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Sure Connyoung. Investors raced to get
their hands on shares of Kakao Pay,…
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pouring about 5 billion U.S.
dollars into retail orders.
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Submitted orders came to around 30 times
the amount of stocks made available.
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Each retail investor will be able
to get an average of 2.3 shares.
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Investors showed high interest in
Kakao Pay as it is the country's
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largest mobile payment service company with
a membership of more than 20 million people.
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The two-day pre-IPO bidding for retail
investors took place this Monday and Tuesday.
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Despite the pandemic, during the
two-day pre-IPO subscription period,
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many investors visited brokerage houses
trying to join in the frenzy. Take a listen.
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"I visited the branch because Kakao Pay's pre-IPO
subscription takes place today and tomorrow.
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You don't make any losses when it comes to buying
shares ahead of the IPO. I'm putting in around 30
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million to 40 million won,... more than the
minimum amount, hoping to get more shares."
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"I came to the branch because of
the Kakao Pay pre-IPO bidding.
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We talk using Kakao app and we use Kakao Pay
whenever we transfer money online. I believe
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most people in South Korea use the service and
it's becoming more common. So I thought owning
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Kakao Pay shares could lead to a profit. I'm
thinking of bidding for 100 shares today."
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Similar to other IPOs, while some people
visited the brokerage houses for the IPO,
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many others subscribed for shares
online. What are some of the things
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that are different this time from previous cases?
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Connyoung, What's different is that
for the first time, on the first day
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of the bidding, the subscription was open until
10 PM for people who subscribe online,... rather
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than 4PM, so that more people can join.
No Ah-young,... an office worker says,
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she bid for shares of Kakao Pay
after she got off work on Monday.
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"During the previous IPO subscriptions,
it was a little burdensome for an office
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worker to do it before 4PM. I
had to put money into my account
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and bid for shares by going into
the app during my working hours.
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It was inconvenient before, but this time, I
feel comfortable as I can do it after work."
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Also, an important difference is
that KakaoPay will be the first
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company in South Korea to distribute its stocks
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ahead of the IPO with an equal chance for all
retail subscribers who deposit the minimum amount.
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Until last year, shares were generally
given to only those who bid large amounts,
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and there was a much smaller chance for those
with low deposits to get any shares at all.
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But starting this year, the allocation method
has been revised so that a certain amount of
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shares allotted for individual investors are
distributed equally as long as those investors
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deposit the minimum amount.
So, unlike other companies,
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Kakao Pay is distributing all of its
shares allotted for retail investors
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which is 25 percent of the new shares
it's issuing,... with an equal chance.
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"This time, 100 percent of shares allotted for
retail investors are distributed with an equal
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chance so, I believe that it is unlikely that
I'll get more shares even if I put more money
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in. So I just deposited the money for
20 shares which is the minimum amount."
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This measure is likely to enable as many
retail investors to own the Kakao Pay shares.
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But due to this measure, many say the
amount of subscription deposits was
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far less than previous blockbuster IPOs
including Kakao bank where the retail
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bids amounted to about 50 billion U.S. dollars.
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To reserve shares, retail investors usually
have to deposit half the amount of the shares
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they want to buy at the IPO price, which means
the minimum investment for Kakao Pay shares is
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900-thousand won... or about 7-hundred-70 dollars,
which is half the amount of the minimum 20 shares.
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The company also took orders
from institutional investors last
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week to set the IPO price... and
I hear the competition was fierce.
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Yes, you are absolutely right Connyoung.
It had a two-day book-building session
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which ended on Thursday, to take
bids from institutional investors.
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The IPO price was set at 90-thousand
won or around 76 U.S. dollars per share.
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It's at the high end of its
proposed price range as it was
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oversubscribed by a factor
of more than 17-hundred.
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Also, more than 70 percent of firms have signed
up to keep the shares for at least 6 months.
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Shares allotted for Kakao Pay
employees were also fully subscribed.
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After it debuts on the KOSPI, the expected
market capitalization of Kakao Pay will be around
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10 billion dollars,... which will put the
fintech firm among the top 30 market caps.
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Experts say the market
expectation for Kakao Pay is high.
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"Kakao Pay is the fintech company that is
backed by Kakao, the most widely used chat
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app in South Korea. It has high potential
for expansion in the financial market
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and the company is expected to have
increased revenue and profits."
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Kakao Pay is likely to make headlines on the
business pages on its first day of public
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trading next Wednesday,... as it is getting
lots of attention from investors. So what's
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the expectation of the share
price on the first day of trading?
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With the fierce competition of the
subscription for shares,... many
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are expecting the share price to
jump shortly after trading begins.
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But some experts say 'ddasang', a
local market slang describing the
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share opening at more than twice the IPO price
and hitting the daily upper limit of 30 percent
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above the opening price, is
not likely for Kakao Pay.
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"Currently, the financial market
is going through a slow period.
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The price of Kakao Bank shares failed
to double on the first day of trading.
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Kakao Pay is likely to go through similar
phases in the early days of trading."
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Another expert suggested it could
be overpriced, highlighting how the
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IPO had already been delayed by a couple of
months as the country's financial watchdog
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said the initial valuation was too high,…
calling Kakao Pay to revise down its prospects.
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"I personally think that on the first and second
day of trading, the share price could rise.
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But I believe 'ddasang' will not be
possible. Several securities firms
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estimated the reasonable price range to be at
around 100-thousand won to 110-thousand won."
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He added even with the IPO, it is important
for the investors to pay attention to the
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fundamentals and the potential long
term growth of the firm rather than
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selling it in the early days of trading.
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He also said that investors should look
forward to some other big IPOs that are
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coming up in the near future including
Kakao Mobility and LG Energy Solution.
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Ji-young, thank you for the
thorough reporting today.
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Thank you.
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