Naver plans over $1 bn bond issue in H1 to finance platform investment

Naver Corp., South Korea’s top online portal, plans a bond issue worth as much as 1.26 trillion won ($1.13 billion) in local and overseas markets in the first half to finance its aggressive investment in entertainment platforms.

According to investment banking sources on Jan. 31, the country’s top portal operator recently selected KB Securities Co. and NH Investment & Securities Co. as the underwriters for a corporate bond issue worth up to 700 billion won ($626 million) in the local market by the end of February.

The company will soon embark on a bond issuance process, including setting the maturity and bond yields, the sources said.

Naver last tapped the debt market in November 2015 to raise 150 billion won in debenture.

The company is also considering issuing foreign currency denominated bonds worth at least $500 million in the first half of the year.

Naver will hold a board meeting in March to approve its plan to issue the company’s first-ever foreign debt to raise funds in the global market.

The bond issue plans follow a series of recent announcements by the company to acquire local and foreign platforms to increase its influence in the global entertainment market.

Last week, Naver said it is investing 411.8 billion won to acquire a 49% stake in BeNX, a Big Hit Entertainment Co. subsidiary that manages the K-pop online fan community platform Weverse.

Naver and Big Hit, the label behind K-pop sensation BTS, have been competing for the lead position in the K-pop fan community platform market, which has shown consistent growth.

The portal also announced in mid-January that it signed a 660 billion won deal to acquire a 100% stake in Wattpad, the world's largest web novel platform based in Toronto in a move to beef up storytelling content for its entertainment operations. The deal marks Naver’s largest-ever investment in an external company.

NAVER’S DEBT WELCOMED BY MARKET

Analysts said Naver’s debt issue will be well-accepted by investors given its solid earnings and rosy growth prospects.

The company posted on Tuesday a record 2020 operating profit of 1.22 billion won with all-time high revenue of 5.3 trillion won on the back of the widespread non-contact trend amid the COVID-19 pandemic.

It has also maintained a sound financial status for years, with its debt ratio standing at 106% at the end of 2020.

Write to Jin-Seong Kim at jskim1028@hankyung.com
In-Soo Nam edited this article.