camila November 3, 2021

SEOUL (BLOOMBERG) – Kakao Pay, South Korea’s largest mobile payments app, more than doubled in its debut in Seoul, following a rocky path to public markets that was marked by heightened regulatory scrutiny.

Shares of Kakao Pay surged more than 150 per cent in early trading on Wednesday (Nov 3), after the offering was priced at 90,000 won.

The start-up, backed by Mr Jack Ma’s Ant Group, raised 1.53 trillion won (S$1.75 billion), giving the online payments service a market capitalisation of more than 11.7 trillion won before the start of trading.

The initial public offering (IPO) is seen as a litmus test for investor sentiment in South Korea, where a regulatory crackdown on platform companies has hit tech stocks.

The online payments start-up had to postpone its listing by more than two months, after first lowering its targeted IPO size in August as the authorities ordered a revision to its prospectus and, more than a month later, changing its filing again to abide by new regulations.

South Korea has already seen a record amount of IPO deals this year as companies rushed to list their shares and take advantage of high valuations. But the enthusiasm has cooled after the authorities beefed up scrutiny of new listings and retail investors are no longer betting on first-day pops.

Shares of Krafton, creator of video game PUBG, fell as much as 20 per cent on their first day of trading, while K Car dropped 8 per cent on its debut.

Fuelled by online activities during the Covid-19 pandemic, Kakao Pay’s sales more than doubled to 284 billion won last year, helping to narrow net losses by 61 per cent to 25 billion won. Operating profit in the first half of this year was 2.6 billion won.

The mobile payments service with 36 million users is seeking to expand its fintech platform, with plans to add a mobile securities trading service and an insurance service on its app early next year, chief executive Alex Ryu said during an online briefing last week.

The company is also planning to enter China, South-east Asia and Europe, and grow its overseas business to a “meaningful level” within five years.