Markets: Korea’s Kakao Pay Delays $1.3B IPO To November

Kakao Pay logo


In South Korea, Kakao is one of the leading tech giants, best known for its KakaoTalk messenger app. But like many tech companies, it’s long branched out from messaging into other sectors such as gaming and fintech and made strides there.

  • In fintech, Kakao has a separate digital bank (KakaoBank) and mobile payments and wallet app (Kakao Pay). The Korean tech giant took KakaoBank public this July with an IPO that raised $2.2bn and didn’t just stop there. It then sought to take Kakao Pay public in a separate IPO but has hit some obstacles trying to do so.
  • Just as it sought to take Kakao Pay public, the South Korean government toughened regulations on fintech apps. It made Kakao Pay suspend some services like insurance though the suspended services accounted for a minor part of its revenue. Then, Kakao Pay adjusted its IPO fundraising target to $1.3bn, 6% lower than it previously sought.
  • But even with the hiccups, Kakao Pay still sought to go public by October this year. However, it has just been announced that the IPO has been delayed to November to make some adjustments. It now expects to list shares on the Korea Exchange on the 3rd of November, with the previous IPO terms staying firm.
  • The IPO delay isn’t much of a shock and was somewhat expected because of the recently stricter regulations on Korean fintech apps. Typically, a big company like Kakao Pay needs some time to adjust to the new rules, especially as it’s set to debut in public markets where investors can be unforgiving if regulatory issues arise.
Kakao Pay is a joint venture between Kakao, the Korean tech giant, and Ant Group, the Chinese fintech giant associated with Alibaba. Kakao and Ant Group hold respective stakes of 55% and 45% in the venture.
  • According to its IPO prospectus, Kakao Pay brought in $241mn in revenue in 2020, double from the previous year, and has 36 million registered users
Notably, shareholder Ant Group is currently in a scuffle with the Chinese government. Once a darling of China’s tech industry that was about to hold a blockbuster IPO, the country’s regulators has clamped down on it harshly, notably after founder Jack Ma criticized the government for supposedly stifling financial innovation.
  • But, it appears that Ant Group’s saga with the Chinese government doesn’t have much bearing on Kakao Pay’s upcoming IPO.

                                          

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