Korea / Special Situations, Clepsydra Capital

Sanghyun Park

Korea / Special Situations

Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/26730" target="_blank" data-smartkarma-citation="entities:26730:1">Kakao Games Corp (1404796D KS)</a> said in a regulatory filing that it had raised ₩140bil in the form of new rights offering from multiple investors.</p><div class="content-highlight"><p><em>This is the regulatory filing at DART.</em></p><p><em><a href="https://dart.fss.or.kr/dsaf001/main.do?rcpNo=20180214800097" target="_blank">https://dart.fss.or.kr/dsaf001/main.do?rcpNo=20180214800097</a></em></p></div><p>Kakao's pre offering shares outstanding was 4,505,650 common shares. In this rights offering, Kakao offered a total of 901,132 common shares to raise ₩140,000,768,652 (₩140.0bil). This means the offering price for each share was ₩155,361.</p><table class="table table-striped"><tbody><tr><td colspan="2" style="width: 713px;">Kakao Games rights offering summary</td></tr><tr><td style="width: 403.4px;">Pre offering shares outstanding</td><td style="text-align: right; width: 309.6px;">4,505,650 common shares</td></tr><tr><td style="width: 403.4px;">New rights offering</td><td style="text-align: right; width: 309.6px;">901,132 common shares</td></tr><tr><td style="width: 403.4px;">Total offering amount</td><td style="text-align: right; width: 309.6px;">₩140,000,768,652 (₩140.0bil)</td></tr><tr><td style="width: 403.4px;">Offering price per share</td><td style="text-align: right; width: 309.6px;">₩155,361</td></tr><tr><td colspan="2" style="width: 713px;"><em>Source: DART</em></td></tr></tbody></table><p>At this offering price of ₩155,361, Kakao Games is now being valued at ₩840bil. This is a substantial increase from a ₩500bil level that the market seemed to grant for the value of Kakao Games only a year ago.</p><table class="table table-striped"><tbody><tr><td colspan="2" style="width: 711px;">Kakao Games valuation</td></tr><tr><td style="width: 403.4px;">Offering price per share</td><td style="text-align: right; width: 307.6px;">₩155,361</td></tr><tr><td style="width: 403.4px;">Post offering shares outstanding</td><td style="text-align: right; width: 307.6px;">5,406,782 common shares</td></tr><tr><td style="width: 403.4px;"><em><strong>Company valuation based on the offering price of ₩155,361</strong></em></td><td style="text-align: right; width: 307.6px;"><em><strong>₩840,003,058,302 (₩840.0bil)</strong></em></td></tr><tr><td colspan="2" style="width: 711px;"><em>Source: <a href="https://www.smartkarma.com/profiles/354" target="_blank" data-smartkarma-citation="accounts:354">Sanghyun Park</a></em></td></tr></tbody></table><p>We don't yet have official FY17 financial numbers for Kakao Games. But it is estimated that Kakao Games' FY17 sales is ₩200bil with ₩80bil in operating profit. This means this 840bil valuation is like 4.2 times FY17 sales and 10.5 times FY17 OP.</p><table class="table table-striped"><tbody><tr><td colspan="2" style="width: 713px;">Kakao Games FY17 estimated financials (₩ bil)</td></tr><tr><td style="width: 406.8px;">Sales</td><td style="width: 306.2px;">About 200</td></tr><tr><td style="width: 406.8px;"> - ₩840bil valuation</td><td style="width: 306.2px;">4.2x FY17 sales</td></tr><tr><td style="width: 406.8px;">OP</td><td style="width: 306.2px;"><p>80 (40% OPM)</p><p><em>* About 30% NPM</em></p></td></tr><tr><td style="width: 406.8px;"> - ₩840bil valuation</td><td style="width: 306.2px;">10.5x FY17 OP</td></tr><tr><td colspan="2" style="width: 713px;"><em>Source: FnGuide, <a href="https://www.smartkarma.com/profiles/354" target="_blank" data-smartkarma-citation="accounts:354">Sanghyun Park</a></em></td></tr></tbody></table><p>Who got the new rights? <a href="https://www.smartkarma.com/entities/22839" target="_blank" data-smartkarma-citation="entities:22839:1">Netmarble Games Corporation (251270 KS)</a> and <a href="https://www.smartkarma.com/entities/26" target="_blank" data-smartkarma-citation="entities:26:1">Tencent Holdings Ltd (700 HK)</a> (through Aceville PTE. LTD) got 321,832 common shares (₩50bil) each. As a result, their respective post-offering shareholding % will be 5.95%. <a href="https://www.smartkarma.com/entities/15445" target="_blank" data-smartkarma-citation="entities:15445:1">Actoz Soft Co Ltd (052790 KS)</a> got 128,734 common shares (₩20bil) for a 2.38% stake. Bluehole, the developer of the PUBG, invested ₩10bil and Premier M&amp;A PEF invested ₩10bil.</p><table class="table table-striped"><tbody><tr><td colspan="4" style="width: 742px;">Kakao Games' new shareholders</td></tr><tr><td style="width: 312px;"><em><strong>Investor</strong></em></td><td style="text-align: right; width: 190px;"><em><strong>Shares</strong></em></td><td style="text-align: right; width: 95px;"><em><strong>Amount</strong></em></td><td style="text-align: right; width: 145px;"><em><strong>Post offering shareholding %</strong></em></td></tr><tr><td style="width: 312px;"><a href="https://www.smartkarma.com/entities/22839" target="_blank" data-smartkarma-citation="entities:22839:1">Netmarble Games Corporation (251270 KS)</a></td><td style="text-align: right; width: 190px;">321,832 common shares</td><td style="text-align: right; width: 95px;">₩50bil</td><td style="text-align: right; width: 145px;">5.95%</td></tr><tr><td style="width: 312px;"><p>Aceville PTE. LTD</p><p>* <a href="https://www.smartkarma.com/entities/26" target="_blank" data-smartkarma-citation="entities:26:1">Tencent Holdings Ltd (700 HK)</a></p></td><td style="text-align: right; width: 190px;">321,832 common shares</td><td style="text-align: right; width: 95px;">₩50bil</td><td style="text-align: right; width: 145px;">5.95%</td></tr><tr><td style="width: 312px;"><p>Actozsoft HongKong LTD</p><p> * <a href="https://www.smartkarma.com/entities/15445" target="_blank" data-smartkarma-citation="entities:15445:1">Actoz Soft Co Ltd (052790 KS)</a></p></td><td style="text-align: right; width: 190px;">64,367 common shares</td><td style="text-align: right; width: 95px;">₩10bil</td><td style="text-align: right; width: 145px;">1.19%</td></tr><tr><td style="width: 312px;"><p>DianDian Interactive Holding</p><p> * <a href="https://www.smartkarma.com/entities/15445" target="_blank" data-smartkarma-citation="entities:15445:1">Actoz Soft Co Ltd (052790 KS)</a></p></td><td style="text-align: right; width: 190px;">64,367 common shares</td><td style="text-align: right; width: 95px;">₩10bil</td><td style="text-align: right; width: 145px;">1.19%</td></tr><tr><td style="width: 312px;">Bluehole Inc.</td><td style="text-align: right; width: 190px;">64,367 common shares</td><td style="text-align: right; width: 95px;">₩10bil</td><td style="text-align: right; width: 145px;">1.19%</td></tr><tr><td style="width: 312px;">Premier M&amp;A PEF</td><td style="text-align: right; width: 190px;">64,367 common shares</td><td style="text-align: right; width: 95px;">₩10bil</td><td style="text-align: right; width: 145px;">1.19%</td></tr><tr><td colspan="4" style="width: 742px;"><em>Source: DART</em></td></tr></tbody></table><p>Currently, Kakao owns a 74.86% stake in Kakao Games. The total shareholding owned by Kakao and its special affiliate persons amounts to 83.11%.</p><table class="table table-striped"><tbody><tr><td style="text-align: center;">Kakao Games shareholding structure before this rights offering</td></tr><tr><td style="text-align: center;">Kim Beom-su (including K-Cube Holdings &amp; his affiliate persons)</td></tr><tr><td style="text-align: center;">↓ 35.7%</td></tr><tr><td style="text-align: center;"><a href="https://www.smartkarma.com/entities/15002" target="_blank" data-smartkarma-citation="entities:15002:1">Kakao Corp (035720 KS)</a></td></tr><tr><td style="text-align: center;"><p>↓ 75.5% (before this rights offering)</p></td></tr><tr><td style="text-align: center;"><em><strong>Kakao Games</strong></em></td></tr><tr><td><p><em>Note: Kim Beom-su owns a 100% stake in K-Cube Holdings.</em></p><p><em>Source: DART</em></p></td></tr></tbody></table><table class="table table-striped"><tbody><tr><td style="width: 449.4px;">Shareholder (before this rights offering)</td><td style="text-align: right; width: 264.6px;">Shareholding %</td></tr><tr><td style="width: 449.4px;">Kakao</td><td style="text-align: right; width: 264.6px;">74.86</td></tr><tr><td style="width: 449.4px;">K-Cube Holdings</td><td style="text-align: right; width: 264.6px;">1.66</td></tr><tr><td style="width: 449.4px;">Namgung Hoon (current co-CEO)</td><td style="text-align: right; width: 264.6px;">5.35</td></tr><tr><td style="width: 449.4px;">Lee Si-woo</td><td style="text-align: right; width: 264.6px;">0.54</td></tr><tr><td style="width: 449.4px;">Nam Jae-kwan</td><td style="text-align: right; width: 264.6px;">0.16</td></tr><tr><td style="width: 449.4px;">Park Young-ho</td><td style="text-align: right; width: 264.6px;">0.05</td></tr><tr><td style="width: 449.4px;">Kim Dong-joon</td><td style="text-align: right; width: 264.6px;">0.46</td></tr><tr><td style="width: 449.4px;"><em><strong>Total owned by the major shareholder &amp; its special affiliate persons</strong></em></td><td style="text-align: right; width: 264.6px;"><em><strong>83.11</strong></em></td></tr><tr><td style="width: 449.4px;"> - Treasury shares</td><td style="text-align: right; width: 264.6px;">0.03</td></tr><tr><td style="width: 449.4px;">Other minority shareholders</td><td style="text-align: right; width: 264.6px;">16.89</td></tr><tr><td colspan="2" style="width: 714px;"><em>Source: DART</em></td></tr></tbody></table><p>After this rights offering, the total owned by the major shareholder and its special affiliate persons will be reduced from 83.11% to 69.26%.</p><table class="table table-striped"><tbody><tr><td style="width: 449.8px;">Shareholders (after this rights offering)</td><td style="text-align: right; width: 263.2px;">Shareholding %</td></tr><tr><td style="width: 449.8px;">Kakao</td><td style="text-align: right; width: 263.2px;">62.38</td></tr><tr><td style="width: 449.8px;">K-Cube Holdings</td><td style="text-align: right; width: 263.2px;">1.38</td></tr><tr><td style="width: 449.8px;">Namgung Hoon (current co-CEO)</td><td style="text-align: right; width: 263.2px;">4.46</td></tr><tr><td style="width: 449.8px;">Lee Si-woo</td><td style="text-align: right; width: 263.2px;">0.45</td></tr><tr><td style="width: 449.8px;">Nam Jae-kwan</td><td style="text-align: right; width: 263.2px;">0.13</td></tr><tr><td style="width: 449.8px;">Park Young-ho</td><td style="text-align: right; width: 263.2px;">0.04</td></tr><tr><td style="width: 449.8px;">Kim Dong-joon</td><td style="text-align: right; width: 263.2px;">0.38</td></tr><tr><td style="width: 449.8px;"><em><strong>Total owned by the major shareholder &amp; its special affiliate persons</strong></em></td><td style="text-align: right; width: 263.2px;"><em><strong>69.26</strong></em></td></tr><tr><td style="width: 449.8px;"> - Treasury shares</td><td style="text-align: right; width: 263.2px;">0.02</td></tr><tr><td style="width: 449.8px;">Other minority shareholders</td><td style="text-align: right; width: 263.2px;">14.07</td></tr><tr><td style="width: 449.8px;"><em><strong><a href="https://www.smartkarma.com/entities/22839" target="_blank">Netmarble Games Corporation (251270 KS)</a></strong></em></td><td style="text-align: right; width: 263.2px;"><em><strong>5.95</strong></em></td></tr><tr><td style="width: 449.8px;"><em><strong><a href="https://www.smartkarma.com/entities/26" target="_blank">Tencent Holdings Ltd (700 HK)</a></strong></em></td><td style="text-align: right; width: 263.2px;"><em><strong>5.95</strong></em></td></tr><tr><td style="width: 449.8px;"><em><strong><a href="https://www.smartkarma.com/entities/15445" target="_blank">Actoz Soft Co Ltd (052790 KS)</a></strong></em></td><td style="text-align: right; width: 263.2px;"><em><strong>3.38</strong></em></td></tr><tr><td style="width: 449.8px;"><em><strong>Bluehole Inc.</strong></em></td><td style="text-align: right; width: 263.2px;"><em><strong>1.19</strong></em></td></tr><tr><td style="width: 449.8px;"><em><strong>Premier M&amp;A PEF</strong></em></td><td style="text-align: right; width: 263.2px;"><em><strong>1.19</strong></em></td></tr><tr><td colspan="2" style="width: 713px;"><em>Source: DART</em></td></tr></tbody></table>

Kakao Games Corp (1404796D KS) said in a regulatory filing that it had raised ₩140bil in the form of new rights offering from multiple investors.This is the regulatory filing at DART.https://dart.fss.or.kr/dsaf001/main.do?rcpNo=20180214800097Kakao's pre offering shares outstanding was 4,505,650 common shares. In this rights offering, Kakao offered a total of 901,132 common shares to raise ₩140,000,768,652 (₩140.0bil). This means the offering price for each share was ₩155,361.Kakao Games rights offering summaryPre offering shares outstanding4,505,650 common sharesNew rights offering901,132 common sharesTotal offering amount₩140,000,768,652 (₩140.0bil)Offering price per share₩155,361Source: DARTAt this offering price of ₩155,361, Kakao Games is now being valued at ₩840bil. This is a substantial increase from a ₩500bil level that the market seemed to grant for the value of Kakao Games only a year ago.Kakao Games valuationOffering price per share₩155,361Post offering shares outstanding5,406,782 common sharesCompany valuation based on the offering price of ₩155,361₩840,003,058,302 (₩840.0bil)Source: Sanghyun ParkWe don't yet have official FY17 financial numbers for Kakao Games. But it is estimated that Kakao Games' FY17 sales is ₩200bil with ₩80bil in operating profit. This means this 840bil valuation is like 4.2 times FY17 sales and 10.5 times FY17 OP.Kakao Games FY17 estimated financials (₩ bil)SalesAbout 200 - ₩840bil valuation4.2x FY17 salesOP80 (40% OPM)* About 30% NPM - ₩840bil valuation10.5x FY17 OPSource: FnGuide, Sanghyun ParkWho got the new rights? Netmarble Games Corporation (251270 KS) and Tencent Holdings Ltd (700 HK) (through Aceville PTE. LTD) got 321,832 common shares (₩50bil) each. As a result, their respective post-offering shareholding % will be 5.95%. Actoz Soft Co Ltd (052790 KS) got 128,734 common shares (₩20bil) for a 2.38% stake. Bluehole, the developer of the PUBG, invested ₩10bil and Premier M&amp;A PEF invested ₩10bil.Kakao Games' new shareholdersInvestorSharesAmountPost offering shareholding %Netmarble Games Corporation (251270 KS)321,832 common shares₩50bil5.95%Aceville PTE. LTD* Tencent Holdings Ltd (700 HK)321,832 common shares₩50bil5.95%Actozsoft HongKong LTD * Actoz Soft Co Ltd (052790 KS)64,367 common shares₩10bil1.19%DianDian Interactive Holding * Actoz Soft Co Ltd (052790 KS)64,367 common shares₩10bil1.19%Bluehole Inc.64,367 common shares₩10bil1.19%Premier M&amp;A PEF64,367 common shares₩10bil1.19%Source: DARTCurrently, Kakao owns a 74.86% stake in Kakao Games. The total shareholding owned by Kakao and its special affiliate persons amounts to 83.11%.Kakao Games shareholding structure before this rights offeringKim Beom-su (including K-Cube Holdings &amp; his affiliate persons)↓ 35.7%Kakao Corp (035720 KS)↓ 75.5% (before this rights offering)Kakao GamesNote: Kim Beom-su owns a 100% stake in K-Cube Holdings.Source: DARTShareholder (before this rights offering)Shareholding %Kakao74.86K-Cube Holdings1.66Namgung Hoon (current co-CEO)5.35Lee Si-woo0.54Nam Jae-kwan0.16Park Young-ho0.05Kim Dong-joon0.46Total owned by the major shareholder &amp; its special affiliate persons83.11 - Treasury shares0.03Other minority shareholders16.89Source: DARTAfter this rights offering, the total owned by the major shareholder and its special affiliate persons will be reduced from 83.11% to 69.26%.Shareholders (after this rights offering)Shareholding %Kakao62.38K-Cube Holdings1.38Namgung Hoon (current co-CEO)4.46Lee Si-woo0.45Nam Jae-kwan0.13Park Young-ho0.04Kim Dong-joon0.38Total owned by the major shareholder &amp; its special affiliate persons69.26 - Treasury shares0.02Other minority shareholders14.07Netmarble Games Corporation (251270 KS)5.95Tencent Holdings Ltd (700 HK)5.95Actoz Soft Co Ltd (052790 KS)3.38Bluehole Inc.1.19Premier M&amp;A PEF1.19Source: DART

Kakao Games - Rights Offering Details & IPO Valuation Study

South Korea

Kakao Games Corp. operates as a multiply platform gaming company. The Company provides mobile games, computer games, virtual reality games, and other related products. Kakao Games markets its products worldwide.

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Kakao Games (293490 KS)

Kakao Games - Rights Offering Details & IPO Valuation Study

Kakao Games Corp (1404796D KS) said in a regulatory filing that it had raised ₩140bil in the form of new rights offering from multiple...

Sanghyun Park

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