Naver-invested startups line up for IPOs; market seems welcome

South Korean startups invested in by top online portal Naver Corp. are gearing up for debuts on the local bourse amid expectations of a welcome market reception.

The companies’ business tie-ups with Naver as well as their technology potential enhance their chances of successful initial public offerings, analysts say.

GIANTSTEP Inc., a display-based visual image producer, plans to go public on the tech-heavy Kosdaq market in March. Korea Investment & Securities Co., its IPO manager, is set to receive subscriptions from retail investors for two days from Mar. 2. Its enterprise value is estimated at 138.5 billion won ($125 million).

A relatively small startup, GIANTSTEP posted an operating loss of 1.2 billion won on revenue of 10.3 billion won in the first nine months of 2020.

But Naver acquired a 9% stake in the company with 7 billion won in investment or 9,767 won a share in August 2020. With the stake, Naver is its second-largest shareholder.

GIANTSTEP has been providing its technology to Naver NOW, the portal’s live music and audio streaming service.

“Naver has been with us as a strategic investor. We don’t expect it to sell off its stake even after the lockup period of the IPO,” said a GIANTSTEP official.

Naver will be barred from selling the startup’s shares for one year after the IPO. GIANTSTEP plans to float its stock on Kosdaq with an indicative price range of 9,000-10,000 won per share. Naver will own 7.6% of the company after the initial share sale.

QUALSON, ANOTHER ‘NAVER FAMILY’ STARTUP, EYES IPO

Another Naver-invested venture firm, Alchera Inc., made a trading debut on the junior stock market on Dec. 21 last year.

The company, which specializes in computer vision, deep learning and augmented reality, received 1.5 billion won in investment from Naver upon its establishment in 2016. Naver holds a 15.4% stake in Alchera through the portal’s subsidiary Snow, a smartphone camera application operator.

Qualson Inc., which develops mobile language learning apps such as Superfan, Real Class and Brit English, is also considering an IPO. Naver invested 3 billion won in the company for a 2% stake in September 2020.

Naver, which previously invested in startups through venture funds, began direct investment in such companies in recent years to create synergy through business tie-ups.

In 2020 alone, Naver invested a total of 143.6 billion won in 30 local tech companies, including property developer YN Culture & Space (95 billion won) and online shopping startups Delicious (7.6 billion won) and Brandi (5 billion won).

“Naver-invested companies such as GIANTSTEP can expect steady revenue growth given their backing by the big portal. They will likely be well received by IPO market investors,” said a startup industry official.

Write to Geun-Ho Im at eigen@hankyung.com
In-Soo Nam edited this article.