Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

<ul>
<li>Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.</li>
<li>On the IPOs front, Campus Activewear got great coverage, while Rainbow and Shieldus appear to be struggling.</li>
<li>There were no large placements, apart from a selldown in <a href="https://www.smartkarma.com/entities/areit-ayalaland-reit" target="_blank" data-smartkarma-citation="entities:28856:1" rel="noopener">Areit (AyalaLand REIT) (AREIT PM)</a> and a friends and family round in <a href="https://www.smartkarma.com/entities/zhongyuan-bank-co-ltd" target="_blank" data-smartkarma-citation="entities:24139:1" rel="noopener">Zhongyuan Bank (1216 HK)</a>.</li>
</ul>


Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
On the IPOs front, Campus Activewear got great coverage, while Rainbow and Shieldus appear to be struggling.
There were no large placements, apart from a selldown in Areit (AyalaLand REIT) (AREIT PM) and a friends and family round in Zhongyuan Bank (1216 HK).


ECM Weekly (2nd May 22) - LIC, Shieldus, One Store, Campus, Rainbow, Kakao Pay, Uju, GoTo, Zhongyuan

<ul>
<li>SK Shieldus (SKS) aims to raise around US$800m via issuing a mix of primary and secondary shares in its Korea IPO.</li>
<li>SKS is the security subsidiary of SK Square. It provides security services across four main categories: information security/Cybersecurity, convergence security, physical security, and Safety &amp; Care.</li>
<li>In this note, we will look at the refiling updates.</li>
</ul>


SK Shieldus (SKS) aims to raise around US$800m via issuing a mix of primary and secondary shares in its Korea IPO.
SKS is the security subsidiary of SK Square. It provides security services across four main categories: information security/Cybersecurity, convergence security, physical security, and Safety &amp; Care.
In this note, we will look at the refiling updates.


SK Shieldus IPO - Refiling Disclosures Should Make Multiples Move, LOWER.

<ul>
<li>SK Shieldus (SKS) aims to raise around US$800m via a mix of issuing primary and secondary shares in its Korea IPO.</li>
<li>SKS is the security subsidiary of SK Square. It provides security services across four main categories: information security/Cybersecurity, convergence security, physical security, and Safety &amp; Care.</li>
<li>In this note, we will talk about the postive aspects of the deal.</li>
</ul>


SK Shieldus (SKS) aims to raise around US$800m via a mix of issuing primary and secondary shares in its Korea IPO.
SKS is the security subsidiary of SK Square. It provides security services across four main categories: information security/Cybersecurity, convergence security, physical security, and Safety &amp; Care.
In this note, we will talk about the postive aspects of the deal.


SK Shieldus IPO - The Positives - Decent Growth, Diversifying Its Revenue Base

Korea / Special Situations, Clepsydra Capital

Sanghyun Park

Korea / Special Situations

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

Investigate special situations, pairs, and index rebalancing trades in Korea.

Event-Driven

<p>There is a lot of confusion about exactly in which areas Kakao is under investigation by the Fair Trade Commission.</p><div class="content-highlight"><p><strong>The Fair Trade Commission is investigating K Cube Holdings from two angles.</strong></p></div><hr><h2>First: Non-disclosure of data on affiliates</h2><p>The FTC requires every business group whose total assets exceed ₩10T to submit data on all affiliates to designate a cross-ownership restricted business group every year. In particular, the FTC requires detailed shareholder status data for companies (wholly or partially) owned by the family members of the head of a business group.</p><p>This purpose is clear. This is intended to regulate the exploitation of private interests by an owner family. That is, the FTC intends to prevent an unfair transfer of wealth.</p><div class="content-highlight">
<p><strong>However, the Fair Trade Commission argues that detailed data on K Cube Holdings, the de facto holding company of Kakao, have not been submitted for a long time.</strong></p>
<p><strong>The FTC is planning to intensively investigate whether K Cube Holdings has received profits from Kakao in an unfair way.</strong></p>
</div><p>K Cube Holdings was established in January 2007 for the purpose of software development, and Kim Beom-soo (Kakao founder and chairman) owns 100% of the shares. K Cube Holdings currently owns a 10.59% stake in Kakao.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Kakao shareholding"}'>Kakao shareholding</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Kim Beom-su"}'>Kim Beom-soo</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.1329}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>13.29%</td>
</tr>
<tr><td colspan="2"></td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"K Cube Holdings"}'><strong>K Cube Holdings</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.1057}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'><strong>10.57%</strong></td>
</tr>
<tr><td colspan="2"><strong> </strong></td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"NPS"}'>NPS</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.084}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>8.40%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"MAXIMO PTE (Tencent)"}'>MAXIMO PTE (Tencent)</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.0629}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>6.29%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"BlackRock"}'>BlackRock</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.051652177348374975}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>5.17%</td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: KRX FIND"}'>Source: KRX FIND</td></tr>
</tbody>
</table><p>Most of K Cube Holdings' seven employees (as of April of this year) are the family members of Chairman Kim. Chairman Kim's younger brother, Kim Hwa-young, served as the CEO until the end of last year. Chairman Kim and his wife (Hyoung Mi-sun) are part-time directors. Chairman Kim's son Kim Sang-bin and his daughter Kim Ye-bin also serve at the company.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/229/621/original/1.jpeg?1631585050" class="editor-image img-responsive" data-smartkarma-image-id="229621"></figure><h2>Second: Violation of the Separation of Industrial &amp; Financial Capital</h2>
<p>The second is actually more fatal. The FTC is also investigating allegations that Kakao violated the 'Regulation on Separation of Industrial and Financial Capital'.</p>
<div class="content-highlight"><p><strong>K Cube Holdings changed its business registration type this year from management consulting to financial investment. As a result, K Cube Holdings, a financial company, came to govern the non-financial company, Kakao.</strong></p></div>
<p>The Fair Trade Act stipulates that financial companies belonging to a cross-ownership restricted business group cannot exercise their voting rights over non-financial companies in accordance with the principle of Separation of Industrial and Financial Capital.</p>
<p><strong>Violation of the Separation of Industrial and Financial Capital is way more serious than an unfair transfer of wealth and is subject to severe penalties.</strong></p></section>

There is a lot of confusion about exactly in which areas Kakao is under investigation by the Fair Trade Commission.The Fair Trade Commission is investigating K Cube Holdings from two angles.First: Non-disclosure of data on affiliatesThe FTC requires every business group whose total assets exceed ₩10T to submit data on all affiliates to designate a cross-ownership restricted business group every year. In particular, the FTC requires detailed shareholder status data for companies (wholly or partially) owned by the family members of the head of a business group.This purpose is clear. This is intended to regulate the exploitation of private interests by an owner family. That is, the FTC intends to prevent an unfair transfer of wealth.
However, the Fair Trade Commission argues that detailed data on K Cube Holdings, the de facto holding company of Kakao, have not been submitted for a long time.
The FTC is planning to intensively investigate whether K Cube Holdings has received profits from Kakao in an unfair way.
K Cube Holdings was established in January 2007 for the purpose of software development, and Kim Beom-soo (Kakao founder and chairman) owns 100% of the shares. K Cube Holdings currently owns a 10.59% stake in Kakao.





Kakao shareholding

Kim Beom-soo
13.29%



K Cube Holdings
10.57%

 

NPS
8.40%


MAXIMO PTE (Tencent)
6.29%


BlackRock
5.17%

Source: KRX FIND

Most of K Cube Holdings' seven employees (as of April of this year) are the family members of Chairman Kim. Chairman Kim's younger brother, Kim Hwa-young, served as the CEO until the end of last year. Chairman Kim and his wife (Hyoung Mi-sun) are part-time directors. Chairman Kim's son Kim Sang-bin and his daughter Kim Ye-bin also serve at the company.Second: Violation of the Separation of Industrial &amp; Financial Capital
The second is actually more fatal. The FTC is also investigating allegations that Kakao violated the 'Regulation on Separation of Industrial and Financial Capital'.
K Cube Holdings changed its business registration type this year from management consulting to financial investment. As a result, K Cube Holdings, a financial company, came to govern the non-financial company, Kakao.
The Fair Trade Act stipulates that financial companies belonging to a cross-ownership restricted business group cannot exercise their voting rights over non-financial companies in accordance with the principle of Separation of Industrial and Financial Capital.
Violation of the Separation of Industrial and Financial Capital is way more serious than an unfair transfer of wealth and is subject to severe penalties.

Kakao's De Facto Holding Company K Cube Holdings: Exactly What Are They Accused Of?

<div><p>Kakao Pay (KP), one of South Korea’s largest payment and financial services apps, aims to raise up to US$1.3bn in its South Korean IPO. Kakao held a 55% stake prior to listing, with Ant Financial holding the balance 45% stake.</p></div><div><p>As of 1H21, KP had a total of 36m users and around 20m monthly active users (MAU). It processed a total GMV of KRW66.9tn in 2020 and it had already generated KRW47.9tn GMV in 1H21 itself. As of the end of 1H21, it had dealings with more than 610,000 affiliated stores and 100 financial institutions.</p></div><div><p>Since spinning out from Kakao in 2017, the number of MAUs have grown 14x from 2Q17 to 2Q21, while the quarterly transaction amount grew 61x from KRW0.4tn in 2Q17 to KRW24.5tn in 2Q21. </p></div><div><p>Over the past few years the company has been expanding its offering beyond payment processing to include other financial products. On the back of this, its revenue has been growing faster than its GMV.</p></div><div>
<p>We have covered most aspects of the deal in our earlier notes, <a href="https://www.smartkarma.com/insights/kakao-pay-ipo-guided-by-ant-financial-to-be-a-mini-ant" target="_blank" rel="noopener">Kakao Pay IPO - Guided by Ant Financial to be a mini Ant </a>and  <a href="https://www.smartkarma.com/insights/kakao-pay-ipo-peer-comparison-local-and-international" target="_blank" rel="noopener">Kakao Pay IPO - Peer comparison - local and international</a>.</p>
<p>In this note we will talk about valuations and the latest announcement by the regulators.</p>
</div>

Kakao Pay (KP), one of South Korea’s largest payment and financial services apps, aims to raise up to US$1.3bn in its South Korean IPO. Kakao held a 55% stake prior to listing, with Ant Financial holding the balance 45% stake.As of 1H21, KP had a total of 36m users and around 20m monthly active users (MAU). It processed a total GMV of KRW66.9tn in 2020 and it had already generated KRW47.9tn GMV in 1H21 itself. As of the end of 1H21, it had dealings with more than 610,000 affiliated stores and 100 financial institutions.Since spinning out from Kakao in 2017, the number of MAUs have grown 14x from 2Q17 to 2Q21, while the quarterly transaction amount grew 61x from KRW0.4tn in 2Q17 to KRW24.5tn in 2Q21. Over the past few years the company has been expanding its offering beyond payment processing to include other financial products. On the back of this, its revenue has been growing faster than its GMV.
We have covered most aspects of the deal in our earlier notes, Kakao Pay IPO - Guided by Ant Financial to be a mini Ant and  Kakao Pay IPO - Peer comparison - local and international.
In this note we will talk about valuations and the latest announcement by the regulators.


Kakao Pay IPO - Valuation and Likely Impact of Latest Announcement

South Korea

Kakao Entertainment Corp. operates as an application software development company. The Company provides online cartoons, online novels, music, and more. Kakao Entertainment conducts businesses in South Korea.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Kakao Entertainment (103260 KS)

ECM Weekly (2nd May 22) - LIC, Shieldus, One Store, Campus, Rainbow, Kakao Pay, Uju, GoTo, Zhongyuan

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.

Sumeet Singh

SK Shieldus IPO - Refiling Disclosures Should Make Multiples Move, LOWER.

SK Shieldus (SKS) aims to raise around US$800m via issuing a mix of primary and secondary shares in its Korea IPO. In this note we will look at the...

Sumeet Singh

SK Shieldus IPO - The Positives - Decent Growth, Diversifying Its Revenue Base

SK Shieldus (SKS) aims to raise around US$800m via a mix of issuing primary and secondary shares in its Korea IPO. In this note, we talk about the...

Sumeet Singh

Kakao's De Facto Holding Company K Cube Holdings: Exactly What Are They Accused Of?

This post discusses exactly what K Cube Holdings and chairman Kim are accused of by the FTC and why this issue is so critical that Kakao's share...

Sanghyun Park

Kakao Pay IPO - Valuation and Likely Impact of Latest Announcement

Kakao Pay, one of South Korea’s largest payment and financial services apps, aims to raise up to US$1.3bn in its South Korean IPO. Kakao held a 55%...

Sumeet Singh

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)