Kakao Pay CEO Ryu Young-joon speaks during an online press conference on Oct. 25. (Kakao Pay)
Kakao Pay, the fintech arm of mobile giant Kakao Corp., plans to accelerate its global expansion drive after its market debut slated for Nov. 3, the company’s CEO said on Oct. 25.
“In five years, overseas businesses will become an important part of Kakao Pay,” Ryu Young-joon said during an online press conference Monday, adding that his company plans to target both the cross-border payment industry and other opportunities in finance in the overseas market after the initial public offering.
Currently, Kakao Pay offers payment services in Japan and Macao, while its global expansion that started in 2019 has been slow due to the COVID-19 pandemic. After the public listing, however, the company, a 55:45 joint venture of internet giant Kakao Corp. and China’s Ant Group, plans to launch its service in China, Southeast Asia and Europe, while seeking partnerships with overseas fintech companies and acquisition opportunities.
The global expansion is part of Kakao Pay’s post-IPO strategies, which also include domestic mergers and acquisitions of local fintech firms and supporting its planned stock brokerage and insurance businesses, as well as boosting investments in advanced technologies such as artificial intelligence and deep learning, the company said.
Kakao Pay on Oct. 25 kicked off its two-day public subscription for one of the country’s most anticipated listings of this year after rescheduling its IPO twice from August to October and then to November due to the company’s IPO valuation and changes in the market regulations.
Despite concerns over IPO rescheduling, the fintech company set its IPO price at the top of the indicative price range of 60,000 won to 90,000 won ($51-$77) after a demand forecast from institutional investors on Friday. From Oct. 25 to Oct. 26, Kakao Pay will receive subscriptions from retail investors for 4.25 million shares, or 25 percent of the 17 million new shares to raise at least 1.53 trillion won from them.
With the IPO price, the company’s market capitalization will reach 11.73 trillion won, entering the top 40 in the country’s main bourse.
Kakao Pay’s IPO subscription marks the first time that a company is allocating its shares entirely based on the equal allocation system, which will give the same chances to all subscribers as long as a minimum deposit is made. The equal share allocation system was adopted earlier this year due to the revision of the Capital Market Act to increase retail investors’ odds for IPO allotment, but most of the companies that went public this year adopted both equal and proportional allocation systems.
“We boldly exclude the proportional allocation method that can attract stable funds but benefit only high-net-worth individuals. As Kakao Pay’s goal is to become a platform for everyone, we decided to go 100 percent with the equal allocation so that all subscribers can receive equal chances with a minimum subscription deposit,” the CEO said.
Founded in 2014, Kakao Pay has accumulated a total of 36.5 million users, with the number of monthly active users reaching 19.9 million. Total transactions during the 12 months ending June marked 85 trillion won, and its revenue grew 102 percent on average over the past two years, according to the company. In the first half of this year, Kakao Pay finally moved into the black.
After the IPO, Kakao will hold 47.83 percent and Ant Group 39.12 percent in Kakao Pay. About 28.47 percent worth of shares held by Alipay can be traded from the IPO day, but Kakao Pay said it is unlikely that the Chinese company will unload its shares soon.
“I cannot speak for our shareholders, but Ant Group is a strategic investor of Kakao Pay and we have a long-term partnership. I don’t think Ant will unload their holdings within a short period of time,” Kakao Pay Chief Financial Officer Chang Ki-joo said during the press conference.
By Park Ga-young (email@example.com)