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.

Equity Capital Markets

<p>The last day of Krafton's bookbuilding? Well, it was really a crazy day.</p><div class="content-highlight">
<h2><strong>A suspicious rumor circulated at noon yesterday</strong></h2>
<p><strong>First of all, at noon yesterday, a rumor circulated among local institutions through the messenger mainly used by institutions.</strong></p>
<p><em>Previously, Yahoo Messenger was the main medium for circulating all sorts of rumors and stories between local institutional investors. But after the Yahoo Messenger service was terminated, NateOn is mainly used now.</em></p>
<p><strong>The content of this rumor was somewhat provocative. The rumor said that the bankers are currently holding an emergency meeting due to the low competition rate for institutional subscriptions in the Krafton bookbuilding.</strong></p>
<p><strong>When Mirae Asset Securities learned that this rumor was circulating through NateOn, it immediately denied it, which led to an unusual situation where a banker updated the bookbuilding progress even before bookbuilding was closed.</strong></p>
<p>In fact, Mirae Asset explained to local institutions yesterday afternoon that this Krafton bookbuilding was significantly more positive than initially expected and that the rumor of holding an emergency meeting due to the disastrous results simply was not true.</p>
<p>However, it is said that this rumor has caused confusion among some local institutions and has had some effect on the institutional subscription rate on the last day.</p>
</div>

The last day of Krafton's bookbuilding? Well, it was really a crazy day.
A suspicious rumor circulated at noon yesterday
First of all, at noon yesterday, a rumor circulated among local institutions through the messenger mainly used by institutions.
Previously, Yahoo Messenger was the main medium for circulating all sorts of rumors and stories between local institutional investors. But after the Yahoo Messenger service was terminated, NateOn is mainly used now.
The content of this rumor was somewhat provocative. The rumor said that the bankers are currently holding an emergency meeting due to the low competition rate for institutional subscriptions in the Krafton bookbuilding.
When Mirae Asset Securities learned that this rumor was circulating through NateOn, it immediately denied it, which led to an unusual situation where a banker updated the bookbuilding progress even before bookbuilding was closed.
In fact, Mirae Asset explained to local institutions yesterday afternoon that this Krafton bookbuilding was significantly more positive than initially expected and that the rumor of holding an emergency meeting due to the disastrous results simply was not true.
However, it is said that this rumor has caused confusion among some local institutions and has had some effect on the institutional subscription rate on the last day.


Krafton Bookbuilding: A Quick Recap of Last Day Craziness

<p>Krafton will close the bookbuilding today, which started on the 14th. Two days later, it will finalize and announce the offering price on the 29th.</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":"Schedule"}'>Krafton IPO schedule</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Book close"}'><strong>Book close</strong></td>
<td data-sheets-value='{"1":3,"3":44404}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 7. 27</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Allotment"}'><strong>Allotment</strong></td>
<td data-sheets-value='{"1":3,"3":44406}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 7. 29</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Subscription"}'>Subscription</td>
<td data-sheets-value='{"1":3,"3":44410}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 8. 2</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Payment"}'>Payment</td>
<td data-sheets-value='{"1":3,"3":44413}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 8. 5</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Listing"}'>Listing</td>
<td data-sheets-value='{"1":3,"3":44418}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 8. 10</td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><h2>Online press conference on the 26th</h2><p>Krafton held an online press conference yesterday, where the CFO extensively commented on the bookbuilding atmosphere.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/220/637/original/1.jpeg?1627355163" class="editor-image img-responsive" data-smartkarma-image-id="220637"></figure></section><div class="content-caption">(Courtesy News 1)</div><p>First of all, the CFO said that the response was particularly enthusiastic from overseas institutional investors. He said that they include a number of long-term funds.</p><p><strong>This is a direct quote from Bae Dong-geun, CFO of Krafton. He said,</strong></p><blockquote><p>It is difficult to give a clear answer because the institutional bookbuilding has not been completed yet, but at this point (one day left until the bookbuilding deadline), I can confidently say that it was a success.</p></blockquote><p><strong>He further revealed that overseas institutions participated more aggressively in the subscription than local institutional investors, and this somewhat surprising trend was clearly seen in the actual pricing.</strong></p><h2>What the bankers are saying</h2><p>Then, below are the actual results of bookbuilding being leaked by the bankers.</p><p><strong>The bankers are also saying that the institutional mood confirmed during the two weeks of bookbuilding is obviously hotter than initially expected.</strong></p><div class="content-highlight"><p><strong>For example, on the first day of bookbuilding alone, overseas institutional investors applied for a quantity that was 20 to 30 times more than the allocated quantity at a price higher than the upper end of the indicative price band (₩498,000)</strong></p></div><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Pricing"}'>Indicative price band</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Low, adjusted"}'>Lower end</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"High, adjusted"}'>Upper end</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Price"}'>Price</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":400000}'>₩400,000</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":498000}'><strong>₩498,000</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Base deal size"}'>Base deal size</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":3461.692}' data-sheets-formula="=R[-1]C[0]*Terms!R8C3/1000000000">₩3,461.7B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":4309.80654}' data-sheets-formula="=R[-1]C[0]*Terms!R8C3/1000000000"><strong>₩4,309.8B</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Institutional allotment"}'>- Institutional allotment</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1903.9306000000001}' data-sheets-formula="=R[-1]C[0]*R4C6">₩1,903.9B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":2370.3935969999998}' data-sheets-formula="=R[-1]C[0]*R4C6"><strong>₩2,370.4B</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Implied market cap"}'>Implied market cap</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":19559.228}' data-sheets-formula="=R[-3]C[0]*48898070/1000000000">₩19,559.2B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":24351.23886}' data-sheets-formula="=R[-3]C[0]*48898070/1000000000"><strong>₩24,351.2B</strong></td>
</tr>
<tr><td colspan="3">Source: DART</td></tr>
</tbody>
</table><p>Of course, this news also reached the ears of domestic institutions.</p><p><strong>The pricing for local institutional investors started on the 20th. And it is being said (or leaked by the bankers) that local institutions are placing orders using all available funds as their competitive sentiment must have been triggered by the aggressive participation of foreign institutions.</strong></p>

Krafton will close the bookbuilding today, which started on the 14th. Two days later, it will finalize and announce the offering price on the 29th.





Krafton IPO schedule

Book close
2021. 7. 27


Allotment
2021. 7. 29


Subscription
2021. 8. 2


Payment
2021. 8. 5


Listing
2021. 8. 10

Source: DART

Online press conference on the 26thKrafton held an online press conference yesterday, where the CFO extensively commented on the bookbuilding atmosphere.(Courtesy News 1)First of all, the CFO said that the response was particularly enthusiastic from overseas institutional investors. He said that they include a number of long-term funds.This is a direct quote from Bae Dong-geun, CFO of Krafton. He said,It is difficult to give a clear answer because the institutional bookbuilding has not been completed yet, but at this point (one day left until the bookbuilding deadline), I can confidently say that it was a success.He further revealed that overseas institutions participated more aggressively in the subscription than local institutional investors, and this somewhat surprising trend was clearly seen in the actual pricing.What the bankers are sayingThen, below are the actual results of bookbuilding being leaked by the bankers.The bankers are also saying that the institutional mood confirmed during the two weeks of bookbuilding is obviously hotter than initially expected.For example, on the first day of bookbuilding alone, overseas institutional investors applied for a quantity that was 20 to 30 times more than the allocated quantity at a price higher than the upper end of the indicative price band (₩498,000)







Indicative price band
Lower end
Upper end


Price
₩400,000
₩498,000


Base deal size
₩3,461.7B
₩4,309.8B


- Institutional allotment
₩1,903.9B
₩2,370.4B


Implied market cap
₩19,559.2B
₩24,351.2B

Source: DART

Of course, this news also reached the ears of domestic institutions.The pricing for local institutional investors started on the 20th. And it is being said (or leaked by the bankers) that local institutions are placing orders using all available funds as their competitive sentiment must have been triggered by the aggressive participation of foreign institutions.

Krafton Bookbuilding Last Day: Institutional Mood So Far

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<p>Krafton appears to be doing the PR rounds regarding investor interest in its IPO. <a href="https://asia.nikkei.com/Business/Markets/IPO/Krafton-expects-IPO-success-as-big-investors-show-interest" target="_blank" rel="noopener">The Nikkei</a> and various other news outlets had some positive sounding stories. If Krafton does indeed manage to price at the top end of its range or above we think that would be a fantastic opportunity for investors...</p>

Krafton appears to be doing the PR rounds regarding investor interest in its IPO. The Nikkei and various other news outlets had some positive sounding stories. If Krafton does indeed manage to price at the top end of its range or above we think that would be a fantastic opportunity for investors...

Krafton IPO - A Few Thoughts on Its IP and the Tencent Relationship

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<div class="content-highlight"><p><strong>Krafton held an online press conference today.</strong> The key focus of the <a href="http://koreabizwire.com/krafton-eyes-aggressive-mas-after-ipo/195358" target="_blank" rel="noopener">online press conference</a> was that Krafton will be aggressive in overseas M&amp;As. The company could receive nearly 2.5 trillion won in cash from the IPO proceeds. Plus, the company had net cash of 390 billion won at the end of 1Q 2021. Consequently, Krafton could have nearly<strong> 3.0 trillion won</strong> in net cash post the IPO which the company can use to make big overseas acquisitions.</p></div><p><strong>Krafton IPO = PUBG + SPAC? </strong>In some ways, the key thesis of the Krafton IPO is the continued success of PUBG + emphasis on M&amp;As to grow the business in overseas markets. In that respect, Krafton is telling the investors to trust the company to make excellent acquisitions that could add long-term value for the company. This is probably a tough sell for many investors and this remains a major reason on the poor investors' response on the Krafton IPO.</p><p>In addition, Chinese government's huge crackdown on the US listed Internet companies and the for-profit education sector further raise significant concerns that this crackdown could expand to other sectors such as games which would negatively impact Krafton. Overall, continue to maintain an AVOID rating of this IPO. </p>

Krafton held an online press conference today. The key focus of the online press conference was that Krafton will be aggressive in overseas M&amp;As. The company could receive nearly 2.5 trillion won in cash from the IPO proceeds. Plus, the company had net cash of 390 billion won at the end of 1Q 2021. Consequently, Krafton could have nearly 3.0 trillion won in net cash post the IPO which the company can use to make big overseas acquisitions.Krafton IPO = PUBG + SPAC? In some ways, the key thesis of the Krafton IPO is the continued success of PUBG + emphasis on M&amp;As to grow the business in overseas markets. In that respect, Krafton is telling the investors to trust the company to make excellent acquisitions that could add long-term value for the company. This is probably a tough sell for many investors and this remains a major reason on the poor investors' response on the Krafton IPO.In addition, Chinese government's huge crackdown on the US listed Internet companies and the for-profit education sector further raise significant concerns that this crackdown could expand to other sectors such as games which would negatively impact Krafton. Overall, continue to maintain an AVOID rating of this IPO. 

Major Highlights of Krafton's Online Press Conference & Focus on Overseas M&As Post IPO

<h2>Listing date</h2><p>The listing date of Krafton has been confirmed as August 10th.</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":"Schedule"}'>Krafton IPO schedule</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Book open"}'>Book open</td>
<td data-sheets-value='{"1":3,"3":44391}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 7. 14</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Book close"}'>Book close</td>
<td data-sheets-value='{"1":3,"3":44404}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 7. 27</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Allotment"}'>Allotment</td>
<td data-sheets-value='{"1":3,"3":44406}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 7. 29</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Subscription"}'>Subscription</td>
<td data-sheets-value='{"1":3,"3":44410}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 8. 2</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Payment"}'>Payment</td>
<td data-sheets-value='{"1":3,"3":44413}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 8. 5</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Listing"}'><strong>Listing</strong></td>
<td data-sheets-value='{"1":3,"3":44418}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 8. 10</strong></td>
</tr>
<tr>
<td><em><strong> - Kakao Bank's listing</strong></em></td>
<td><em><strong>2021. 8. 5</strong></em></td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><ul>
<li><strong>The initially scheduled date was August 10th. However, as Kakao Pay's listing date was set for August 12, Krafton could not easily finalize the listing date due to the issue of mutual interference for retail investors with Kakao Pay.</strong></li>
<li><strong>The fact that Krafton confirmed the listing date as soon as Kakao Pay's listing schedule was delayed shows how sensitive Krafton was to this retail interference issue.</strong></li>
</ul><div class="content-highlight">
<p>The listing date of Kakao Bank is August 5, and there is a gap of 3 business days until the listing date of Krafton. However, in this case, Krafton is in a position to absorb retail demand from Kakao Bank. More importantly, Kakao Bank must draw less attention from retail investors than Kakao Pay in terms of business nature, so there is no need to worry too much about potential interference with Kakao Bank.</p>
<p><strong>And then, at least until the end of August, there is no major listing. That is, there is enough temporal buffer for Krafton to drive retail demand.</strong></p>
</div>

Listing dateThe listing date of Krafton has been confirmed as August 10th.





Krafton IPO schedule

Book open
2021. 7. 14


Book close
2021. 7. 27


Allotment
2021. 7. 29


Subscription
2021. 8. 2


Payment
2021. 8. 5


Listing
2021. 8. 10


 - Kakao Bank's listing
2021. 8. 5

Source: DART


The initially scheduled date was August 10th. However, as Kakao Pay's listing date was set for August 12, Krafton could not easily finalize the listing date due to the issue of mutual interference for retail investors with Kakao Pay.
The fact that Krafton confirmed the listing date as soon as Kakao Pay's listing schedule was delayed shows how sensitive Krafton was to this retail interference issue.

The listing date of Kakao Bank is August 5, and there is a gap of 3 business days until the listing date of Krafton. However, in this case, Krafton is in a position to absorb retail demand from Kakao Bank. More importantly, Kakao Bank must draw less attention from retail investors than Kakao Pay in terms of business nature, so there is no need to worry too much about potential interference with Kakao Bank.
And then, at least until the end of August, there is no major listing. That is, there is enough temporal buffer for Krafton to drive retail demand.


Krafton Listing Date Confirmed as August 10th: Rebalancing Trading Timeline

South Korea

Krafton, Inc. operates as a game development company. The Company develops console games, mobile games, computer games, and other related products. Krafton markets its products throughout South Korea.

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Krafton (259960 KS)

Krafton Bookbuilding: A Quick Recap of Last Day Craziness

This post is a quick recap of what's happened yesterday in the Krafton IPO bookbuilding. It examines the market rumor that surfaced yesterday and...

Sanghyun Park

Krafton Bookbuilding Last Day: Institutional Mood So Far

This post summarizes the institutional mood of Krafton's bookbuilding based on what Krafton said in yesterday's press conference and what the...

Sanghyun Park

Krafton IPO - A Few Thoughts on Its IP and the Tencent Relationship

If Krafton manages to price at the top end of its range or above as rumoured we think that would be a fantastic opportunity for investors...

Mio Kato

Major Highlights of Krafton's Online Press Conference & Focus on Overseas M&As Post IPO

Krafton held an online press conference today. The key focus of the online press conference was that Krafton will be aggressive in overseas...

Douglas Kim

Krafton Listing Date Confirmed as August 10th: Rebalancing Trading Timeline

The listing date of Krafton has been confirmed as August 10th. So, this post examines the index rebalancing trading timeline.

Sanghyun Park

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