South Korea’s Kakao Pay Delays $1.3B IPO Over Regulatory Concerns

Growing concerns over regulatory issues prompted South Korea’s Kakao Pay to delay its planned $1.3 billion initial public offering (IPO), according to multiple reports on Friday (Sept. 24). The IPO was scheduled for Sept. 29.

“Kakao’s top management reached a consensus to delay the IPO of Kakao Pay,” a source told The Korea Times. “The reason is simple. The country’s anti-trust watchdog will continue scrutinizing Kakao and its affiliates, a negative factor in terms of setting an IPO valuation. Kakao Group needs to address the regulatory risk first before pursuing IPOs for its affiliates.”

See also: South Korea’s Kakao Pay Pushes Toward A Public Offering

The startup delayed the IPO in July after the financial regulator questioned how it calculated its valuation. The latest delay now follows a loss of over $15 billion in market capitalization this month by Kakao and its affiliates due to the government crackdown. Financial regulators ordered the company to correct its filing and lower its IPO target.

Kakao Pay sells a wide range of financial products and recently suspended its insurance services, indicating at the time that it was going to adhere to regulator’s guidelines.

See: Kakao Pay Updates IPO Prospectus With Reduced Valuation

“Kakao Pay will also delay the timeline of the prospectus for potential institutional investors, which had been scheduled for two days from Sept. 29. Now is not the right time to pursue the planned IPO,” an unnamed source told the news outlet.

A revised version of the startup’s stock registration submitted to financial authorities takes effect Oct. 18, with the IPO expected to happen in November.

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“Investors earlier hailed Kakao Pay’s business models, but because the regulator is intervening directly in the early growth stages, Kakao Pay has to recalculate its target growth rates based on revised business models,” per the source.

Kakao owns 55% of Kakao Pay, with Alipay Singapore holding a 45% stake.