Online lender Kbank aims for IPO at $4 bn valuation in Q4

Kbank, a South Korean online bank, is preparing to list on the main bourse Kospi at an estimated corporate value of up to 5 trillion won ($3.8 billion) in the fourth quarter of this year, in what would be the country’s largest initial public offering this year, according to securities industry sources.

It is now assessing its valuation in comparison with bigger domestic peer KakaoBank Corp. and Brazilian fintech PagSeguro, the sources said on Thursday.

Some investment bankers say the timing might not be ideal for its flotation as the domestic IPO market rally is running out of steam.

But Kbank is aiming to push through with its IPO this year after its first attempt to go public in June 2022 went awry due to high interest rates and lethargic stock market, the sources added.

Kbank will submit an IPO prospectus to the Financial Supervisory Service this month.

Its largest shareholder is South Korea’s card processing company BC Card with a 33.72% stake. Woori Bank, part of Woori Financial Group, holds a 12.58% stake as of the end of June.

Kbank’s estimated valuation is around half of KakaoBank’s market capitalization of 10 trillion won and about 60% of its projection of 7 trillion-8 trillion won back in June 2022.

Its enterprise value would be based on two to three times its book value of 2 trillion won and then applying a 20-30% discount as IPO companies normally do.

KakaoBank, a unit of South Korea’s dominant mobile platform Kakao Corp., went public in 2021 at an estimated valuation of 15.7 trillion-18.5 trillion won, or seven times its book. It is the country’s first online bank listed on the Korean stock market.

But its share price has since plunged to around half of its IPO price of 39,000 won, or 1.6 times its book. The company has been under investigations by financial regulators and government authorities in relation to the process of it buying a majority stake in K-pop pioneer SM Entertainment Co.

In comparison, Brazilian mobile payment app PagSeguro is trading at 1.4 times its book.

If Kbank’s flotation goes as planned, it will mark the country’s largest IPO since Kakao Pay Corp., a fintech platform, went pubic at a valuation of 8.2 trillion won in 2021.

High-profile IPOs that have taken place on the Korea Exchange this year include HD Hyundai Marine Solution Co. at an enterprise value of 3.7 trillion won and Sift Up Corp., a Tencent-backed video game developer, at a valuation of 3.5 trillion won.  

Industry observers, however, point out Kbank’s heavy reliance on Upbit as a downside risk.

Nearly half of accounts at Kbank have been opened in relation to Upbit, a cryptocurrency exchange operator, meaning half of its customers use the banking platform for cryptocurrency transactions. Thus, its operating profit is highly vulnerable to Bitcoin and other cryptos’ performances, they warned.

Write to Jeong-Cheol Bae at bjc@hankyung.com
Yeonhee Kim edited this article