South Korean FinTech KakaoPay Seeks $1.4B IPO

South Korean payments startup Kakao Pay, a division of Kakao Corp, is seeking $1.4 billion (about 1.63 trillion won) in an initial public offering (IPO) that is expected to float 17 million new shares, according to a Friday (July 2) press release.

Backed by China’s Ant Group, the Pangyo-headquartered FinTech expects shares to be priced in the range of 63,000 to 96,000 won each. The startup is expected to begin trading on the Korea Composite Stock Price Index (KOSPI) on Aug. 12.

Kakao Pay was spun off as a separate division from KaKao Corp four years ago after being launched as South Korea’s first simple payment service. Kakao Pay now has over 36 million registered users that transacted some 67 trillion won in 2020. The company offers payments, money transfers, memberships, e-documents and authentications, according to the press release.

In the first quarter of 2021, consolidated sales hit 107.1 billion won with 10.8 billion won in consolidated operating profit. The company is now profitable, with a consolidated net profit of 12 billion won, according to the release.

The estimated valuation of Kakao Pay is 12.5 trillion won. Underwriters are Samsung Securities, JP Morgan, and Goldman Sachs, with co-underwriter Daishin Securities.

The listing follows Coupang’s historic $4.6 billion New York IPO in March, Bloomberg reported.

COVID-19 “has fueled transitions to online financial service,” Kakao Pay CEO Alex Ryu said in an interview with Bloomberg in May. “We were originally targeting the IPO in 2022 or 2023 but the plan has been brought forward because of the steep growth.”

Kakao Bank is also going for an IPO and is planning to offer 65.45 million shares to raise $2.3 billion at an estimated valuation of $16 billion. The company also listed Kakao Games last September. Kakao Mobility and Kakao Entertainment are also looking into public offerings.

Kakao Bank was formed following the Korean government’s initial offering of online banking permits in 2015. The bank’s parent, Kakao Talk, is the country’s most widely used mobile messaging service.