Shares of Krafton Inc, creator of the hit video game PUBG: Battlegrounds, plummeted yesterday on their debut after the company pulled off a US$3.8 billion initial public offering (IPO) that was South Korea’s biggest in more than a decade.
The shares fell as much as 20 percent before closing 8.8 percent down, becoming the first on the KOSPI to drop on debut this year.
The firm backed by Tencent Holdings Ltd (騰訊), which cut its offering by more than 1 trillion won (US$870 million) after regulators questioned its valuation, is grappling with concerns about its dependence on PUBG: Battlegrounds for almost all its revenue and tightening scrutiny over China’s gaming arena.
Photo: Reuters
Seoul-based Krafton’s debut was the second-largest in the nation after Samsung Life Insurance Co’s US$4.3 billion listing in 2010.
It joins a growing list of tech companies and start-ups going public in an IPO boom that is reshaping the nation’s corporate landscape.
The company ended yesterday with a valuation of 22 trillion won, surpassing more established industry names such as Nexon Co and Take-Two Interactive Software Inc.
However, its sheer size discouraged some investors and Krafton underperformed other recent debutantes. Shares of KakaoBank Corp, South Korea’s first Internet-only lender, jumped 79 percent on its debut on Friday last week, exceeding the valuations of the nation’s traditional financial groups.
There are also fears that Beijing is preparing to crack down on the domestic industry after state media last week decried the “spiritual opium” of gaming, potentially constraining one of Krafton’s biggest markets.
“The size of the share float was too big,” Heungkuk Securities Co analyst Choi Jong-kyung said, adding that Krafton’s IPO was more than 1.5 times bigger than that of KakaoBank. “There was also bad news from China during Krafton’s IPO share subscription.”
Founder Chang Byung-gyu’s 14 percent stake in Krafton had been valued at 3.5 trillion won based on the IPO price, according to the Bloomberg Billionaires Index.
He joins a growing list of self-made billionaires in a nation where family-run conglomerates have controlled the bulk of wealth for decades.
Brian Kim, the founder of messaging giant Kakao Corp, is now the nation’s richest person with US$13.2 billion, ahead of Samsung Group’s Jay Y. Lee.
Krafton’s debut puts it alongside some of its region’s biggest game developers including Nexon, worth about US$17 billion, and NCSoft Corp, valued at about US$15.5 billion.
It is fairly unique in its extreme reliance on a single title, with PUBG: Battlegrounds accounting for 96.7 percent of Krafton’s sales in the first quarter.
The PC and console versions of the game had sold more than 75 million copies as of March, and the mobile version was the most-downloaded game in more than 150 nations.
The 14-year-old company, which runs five game studios, is attempting to transform into an entertainment giant by offering animated movies and deep learning-based interactive content around its PUBG: Battlegrounds fantasy universe.
It is planning to launch a new game, PUBG: New State, later this year and a survival horror title, The Callisto Protocol, next year.
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