It has been reported that Kakao Pay is considering delaying its listing to September. This is because of the 135-day rule that a company undergoing an IPO must complete the listing procedure within 135 days from the date of preparation of the financial statements.
According to this regulation, Kakao Pay must complete the listing within August 13, 135 days from the date of the 1Q21 financial statements.
What is the 135-day rule?
The 135-day rule is a rule on the expiration date of accounting settlement data reflected in the IPO prospectus and the securities declarations for overseas investors.
The important point here is that KRX does not have any rule similar to the 135 rule.
On the other hand, the US Securities and Exchange Commission stipulates that all listing schedules, including payment, be completed within 135 days from the time the financial statements stated in the IPO prospectus are prepared.
So why should Kakao Pay care about the 135-day rule?
This rule does not apply to domestic investors, but it inevitably applies when a newly listed company with a large IPO size needs to raise funds abroad that are within the jurisdiction of the SEC.
When is the deadline for the initial IPO prospectus?
If listing proceeds based on the financial statements at the end of the first quarter, March 31 will become the base date. So, the last business day of the 135-day rule will be August 13.
For this reason, Kakao Pay’s listing date was set for August 12, despite concerns about overlapping demand with Kakao Bank.
That is, August 12, the scheduled listing date of Kakao Pay, was a really tight schedule. Therefore, the fact that the Financial Supervisory Service requested a revised report was risking that the listing schedule would be significantly pushed back.
How long will the schedule be delayed?
In the end, the 135-day rule was not met based on the 1Q financial statements, so the IPO prospectus has to be rewritten based on the 2nd quarter financial statements.
This means that the IPO schedule has to be adjusted in line with the submission of the 2Q financial report to be published in mid-August.
In this case, considering that it will take at least a month or more to complete the listing process, including the FSS review period, it is expected that the company will be listed at the end of September at the earliest. In other words, at this point, the possibility of an October listing should remain open.