PUBG developer’s initial public offering is expected to break records, but is not unprecedented.
Krafton, maker of PlayerUnknown’s Battlegrounds, plans to raise around $ 5 billion in an initial public offering scheduled for July 2021, Bloomberg reports. The news comes from Krafton’s regulatory record and shows that the South Korean company plans to sell 10 million shares for between $ 409 and $ 498 each. Analysts believe Krafton will set a final price in the coming weeks.
Either way, Bloomberg said it would make Krafton’s largest IPO in South Korea to date, breaking the previous IPO record of $ 4.6 billion from Coupang Inc in March and $ 4.3 billion from Samsung in 2010.
Bloomberg also said that the asking price for the high-end stock exceeded market expectations for Krafton. While it may seem unprecedented for a studio with essentially intellectual property in its portfolio to plan such a bold IPO, there are several possible reasons behind Krafton’s confidence.
Krafton’s estimated value at the end of 2020 was $ 17.92 billion. While existing investors such as Tencent are behind some of these assets, the mobile game tracker SenorTour reported PUBG Mobile alone generated $ 5 billion in revenue on mobile platforms in 2020.
Free games such as PUBG Mobile accounted for over 98% of mobile gaming revenue in Asia in 2019, and Krafton announced its most recent PUBG Title, PUBG: new state, overwhelmed 17 million pre-registrations in the United States on the Google Play Store.
In short, there is vast potential for continued growth for Krafton and strong returns on investment for its new investors, and the company has already announced plans for growth outside. PUBG. Some of those plans include acquiring other development studios to flesh out Krafton’s portfolio, as it did with Dreamotion earlier in 2021, which has the added benefit of bringing new revenue streams into. the areas where PUBGcould be banned again.
However, Krafton is also venturing into areas outside of gaming.
the four new board members Krafton announced in April 2021 that he has a diverse background including telecommunications and women’s care as part of the company’s commitment to “aggressive investments in promising new ventures.”
One of these new activities is to spearhead the development of a multimedia franchise based on the popular Korean novel The bird that drinks tears, But Reuters Also reports that Krafton intends to invest in deep learning, education and additional media franchises.
Aside from Krafton’s potential for future growth, there is likely another reason why the PUBG developer thinks he can offer such high stock prices in his IPO: an opportunity. A separate Bloomberg The report says that since 2020, South Korea’s retail investment market – hobbyist investors, in other words – has grown exponentially.
People with more money and time have found a new use for their excess cash flow by investing in domestic companies, many of which found themselves with funding shortfalls after international investors ditched shares of an amount of $ 16 billion during the COVID pandemic.
The report says these investors are hungry for high-return, low-risk investments and are eagerly looking for well-known brands like Samsung and Hyundai. While Krafton has naturally not indicated who he expects to buy these shares once the IPO goes live, it seems likely that the decision was planned with this investment environment in mind.
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