Korean fried chicken brand draws over 1,000 investors in bookbuilding

Kyochon F&B, South Korea’s No. 1 fried chicken franchise operator, wrapped up a successful bookbuilding for institutional investors with bids outnumbering offers 999 to 1, according to the company’s regulatory filing on Nov. 2.

Bookbuilding was carried out on Oct. 28 and 29, attracting 1,109 institutional investors, of which 851 were local and 258 were foreign. From the total offering shares, 3.48 million shares, or 60%, were allocated to institutional investors.

The offering price will be 12,300 won ($11) apiece, the upper end of the price band. The company hopes to raise 71.3 billion won ($62.8 million) through the initial public offering, thus its market cap should reach around 309.8 billion won based on the offering price.

Meanwhile, the lockup ratio was around 3.9%, which is much lower than SK Biopharmaceuticals Co. (81.15%), Kakao Games Corp. (58.59%), and Big Hit Entertainment Co. (43.85%), which were all listed this year. 

Given that Kyochon is a franchise, many of the investors were likely hoping to make short-term gains as franchise sectors are largely influenced by fast-changing trends and the economy. 

Despite the institutional investors' meek lockup volume, the total number of shares that can be circulated upon the company's listing is around 4.65 million shares or 18.6% of total shares. This is because the founder and employees' shareholder association hold around 81.4% of the shares, of which 74.13% are subject to lockup until six months after listing.

The company will hold public subscriptions between Nov. 3 and 4. It is set to make its trading debut on Nov. 12 as the country’s first franchise to list on the Seoul bourse. Mirae Asset Daewoo is the IPO manager.

Last year, Kyochon F&B posted around 380 billion won ($334 million) in revenue, a 12% year-on-year increase. Its operating profit also jumped from 20.3 billion won to 39.3 billion won, up 93% during the same period. The hefty growth is owing to an increase in the delivery business following the coronavirus outbreak.

Kyochon runs about 1,000 franchise outlets across the country. The outlets' revenue averaged 618 million won in 2018, the highest among fried chicken chains registered with the country’s Fair Trade Commission.

The company aims to post 770 billion won ($680 million) in revenue and an operating profit of 100 billion won by 2025, with a substantial amount raised from overseas operations. 


Write to Jong-woo Kim at jongwoo@hankyung.com
Danbee Lee edited this article.