KT Cloud is working to raise 1 trillion won ($792 million) by issuing new shares.
The cloud arm of telecom juggernaut KT Corp. plans to use the fresh injection of capital to acquire new businesses and build additional data centers. The overarching goal is to become the No. 1 cloud firm in South Korea, surpassing Amazon Web Services, Inc., a subsidiary of US tech behemoth Amazon.
KT Cloud hired Switzerland-based investment bank Credit Suisse for the process.
The company is targeting private equity firms and sovereign wealth funds abroad. KT Cloud will issue new shares, which the institutional investors will purchase.
Those familiar with the development told The Korea Economic Daily that the company is hoping for a corporate value of between 2 to 3 trillion won.
Employees of KT Cloud assist BC Card, one of its clients
KT Cloud provides cloud management services to the South Korean government and companies based in the country. It has grown rapidly in recent years, on the back of rising demand for digital transformation in the corporate sector.
The cloud subsidiary’s revenue jumped 17% on-year in 2021 to reach 456 billion won. That makes KT Cloud the best-performing cloud service provider among domestic players.
Amazon Web Services takes up more than half of the market share in South Korea. KT Cloud follows with a 20% market share.
Other players include NAVER Cloud, NHN Cloud, and Kakao Enterprise.
Investors of the parent company KT Corp. are not keen on the plan, criticizing it as a “double listing of the conglomerate’s cash cow subsidiary.”
An institutional investor of KT said, “The parent company has a great credit rating and can use its own capital or issue corporate bonds without diluting equity.” The investor added there is not enough logic to justify an additional stock issuance.
KT, for its part, said it will prepare a robust shareholder protection program.
Write to Jun-Ho Cha, Han-Gyeol Seon at chacha@hankyung.com Jee Abbey Lee edited this article.
