Kakao Games Is Going Public And Planning To Raise Over $320m

? IPO

• South Korean publisher and developer of video games Kakao Games has submitted for a listing on a national Kosdaq stock market this September

  • Kokoa Games will be just the first from Kokoa Corp subsidiaries to go public, with plans for Kakao Page, Kakao Commerce and Kakao Bank to follow suit

  • Kokoa Games already planned to go public in 2018, but withdrew due to the number of complications

• The company plans to issue 16m of common shares (or or 21.9% of its outstanding shares) at a price from $16.7 to $20.1 each, with expectations to raise approximately $323m

  • The company plans to spend the proceeds on content improvement and future acquisitions

• It is expected that the firm’s market capitalization after that IPO would be roughly $1.48B, marking it as one of the biggest deals of 2020

• Tencent, Netmarble Games and Krafton, which own 5.6%, 5.6% and an undisclosed minority stake in Kakao Games respectively, are not participating in IPO, being described by the company as strategic investors

  • At the moment, Kakao Games parent company Kakao Corps owns 59% of the company

• Kakao Games has went through the book building process for institutional investors on August 26-27 and accepted subscriptions on September 1-2

• Kokoa Games is expected to go public on September 10-11

? Financial Performance

• During that first half of the year, the company earned $23.4m in net profits on $170.9m of revenue, up 264% and 8.2% YOY respectively. Kokoa Games net profits have risen nearly three times during the first half of 2020

• The firm’s last year sales and operating profit stood at $329.2m and $29.5m respectively, with publisher displaying a three-year compound annual growth rate of 57%

? Previous Funding

• In February 2018, Kakao Games received a major investment of around $131m from five investors:

  • China’s tech giant Tencent invested $46.65m through its two subsidiaries, Aceville Pte. Ltd. and DianDian Interactive Holding

  • Korea’s leading game developer Netmarble Games has also invested $46.65m

  • Korean MMORPG developer Actozsoft has invested $18.66m

  • Korean video game holding and owner of PUBG Krafton has invested $9.33m

  • Finally, leading VC/PE firm in Korea Premier Partners has provided the company with $9.33m of investment through its Premier Growth-M&A Fund

? Product

• Kakao Games is a multi-platform game publisher, mainly focused on domestic distribution and marketing, offering various services that help with product promotion and community support

• Kakao Games PC branch has 38 million users, its Mobile branch has 20 million MAU

• The company mainly known for distribution of PUBG and Path of Exile on its home market, as well as distribution of Black Desert Online in Europe and North America

• It also publishes a large amount of mobile games in Korea, such as Guardian Tales, TES: Blades, Terra Classic, Moonlight Sculptor, Anipang 4 and LINE HELLO BT21 as well as many other titles. Kakao Games helps not only with publishing of games in South Korea, but also with their marketing, both pre- and post-launch technical and customer support

• At home, Kakao Games has partnerships with over 10,000 internet cafes, providing them with advertisement, support and a lineup of 8 titles including PUBG in return for cooperation and “reasonable prices”

• The company’s Kakao gameAds lets game developers and publishers to leverage the 40 million user base of Kakao Talk and Kakao Games for effective targeting of game advertisement

• Just recently, the company released an Android game Guardian Tales, which ranked fifth place in sales on Google Play just half-a-month after its release

SOURCES: KOREANINVESTORS, KOREAHERALD, REUTERS