BTS label Big Hit’s caginess upsets investors ahead of IPO bookbuilding

Big Hit Entertainment Co., home to the seven-member boy band BTS, is set to hold its first official IPO-related conference for South Korean institutional investors on Sept. 22, just two days before the bookbuilding.

The webcast-only event for the IPO, expected to raise up to 1 trillion won ($860 million), will be limited to one person from each institution and participants will be required to submit their names, according to financial industry sources on Sept. 21.

Adding to the tight schedule, Big Hit has banned the release of its IR materials presented during the web conference to the public.

“IPO stands for a public offering, but the company has not provided details about its financial conditions, essential information to assess its value during the bookbuilding,” said one institutional investor.

“It seems like they are taking this IPO as an event to release a new song.”

For foreign investors, the entertainment agency has already held a web-based IR meeting and a conference call for the bookbuilding set for Sept. 24-25.

The planned listing, scheduled for mid-October, comes after BTS became the first Korean artist to top the Billboard Hot 100 list with “Dynamite.”

Not giving enough time and financial data for institutional investors to assess its value, Big Hit may be dodging controversy over its valuations, which analysts say are too high, according to the sources.

The entertainment agency priced its IPO in the band of 105,000-135,000 won per share for a market capitalization of up to 4.8 trillion won.

For the valuation, it used the EV/EBITDA tool, generally used for manufacturing companies. It applied 42.36 times EBITDA, which will translate into 70 times its earnings, more than twice the average of listed entertainment companies in the country.

But institutional investors are unwilling to raise their voices against Big Hit, which is poised to be South Korea’s biggest IPO in the second half of this year.

“Given the hype surrounding the IPO market, Big Hit is expected to have a successful IPO. So it would be difficult to make a complaint to the company,” another investment banking source told The Korea Investors. “Apart from the hype, however, the company needs to give investors confidence.”

Write to Ye-Jin Jun at ace@hankyung.com