Krafton plans 5-for-1 share split ahead of over $880 million IPO

South Korean games developer Krafton Inc., 13.2% owned by Tencent Holdings’ investment arm, plans a five-for-one share split ahead of its planned initial public offering, through which it aims to raise over 1 trillion won ($886 million).

According to the investment banking industry on Mar. 17, the company will seek approval of the stock split plan at its annual shareholders' meeting on Mar. 31.

Under the plan, the face value of its shares will be cut to 100 won apiece from 500 won, with the number of its total outstanding shares rising to 300 million from the current 100 million.

Through the share split, the company wants to make its stock more accessible to a broader base of investors.

On Stockplus, an over-the-counter (OTC) platform for the trading of unlisted companies, Krafton’s stock is changing hands at 2.03 million won a share.

The startup, behind hit game titles PlayerUnknown’s Battlegrounds (PUBG) and TERA, aims to go public in the first half of 2021. It is expected to file for an IPO application with the Korea Exchange soon after its annual general meeting.

AMONG KOREA’S FIRST UNICORNS TO GO PUBLIC

It will be one of Korea’s first unicorn companies, meaning private firms valued at over $1 billion, on the main Kospi bourse.

Krafton is the parent company of game studios PUBG, Bluehole, Pnix, Red Sahara, Delusion, and En Masse Entertainment. Its online multiplayer battle royale game PUBG, which debuted in 2017, was a global hit, further bolstered by the 2018 release of its mobile version.

The company’s net profit nearly quadrupled to 514.9 billion won in the first nine months of 2020 from 143.6 billion won in the year-earlier period, with revenue increasing 79% on the year to 1.24 trillion won.

Considering the price-earnings ratio of 30-40 applied to listed Korean game developers, Krafton’s enterprise value is estimated at about 20 trillion won.

Write to Jong-Woo Kim at jongwoo@hankyung.com
In-Soo Nam edited this article.