Tencent-backed Shift Up seeks June IPO at $2.6 bn value

The gaming developer's enterprise value has soared 75% since October 2023 due to its record earnings and global-hit games

Shift Up's Stellar Blade, launched on April 26, 2024 (Courtesy of Shift Up)

Jeong-Cheol Bae 1

2024-05-28 21:40:25 bjc@hankyung.com

IPOs

South Korean gaming firm Shift Up Corp. is eyeing an initial public offering on the main Kospi in June, with an enterprise value of 3.48 trillion won ($2.6 billion).

The developer of the global-hit action role-playing game Goddess of Victory: Nikke will issue 7.25 million new shares to raise between 340.7 billion won and 435 billion won in June, according to its regulatory filing last week.

The lead managers for the IPO, Korea Investment & Securities Co. and NH Investment & Securities Co., have estimated Shift Up’s corporate value based on a 39.25 times price-earnings ratio, compared with the 35-41 times of its global peers such as Square Enix Holdings Co., Cyberagent Inc. and Kadokawa Corp.

Shift Up was valued at around 2 trillion won last October when Chinese tech giant Tencent Holdings Ltd. acquired an additional 4% stake in the game developer from Korean gaming company Wemade Co. Tencent owns about a 40.1% stake as the second-largest shareholder, following Shift Up Chief Executive Kim Hyung-tae who holds 45%.

Shift Up’s value increased by 75% over the past six months thanks to its record earnings and games. The company posted 111 billion won in operating profit in 2023, up 328% on-year, and 168.6 billion won in revenue, up 155% during the same period.

Its Goddess of Victory: Nikke reclaimed the top-grossing game on the App Store in Korea, Japan and Taiwan earlier this year after a 1.5-year anniversary update. The company’s action-adventure video game Stellar Blade became one of the best-selling games on PlayStationn in the US, UK and Japan after its official launch on April 26.

If Shift Up goes public, its employees are expected to gain significant capital from stock options. The company has granted 4.99 million shares via the options since 2016, and 1.39 million shares of the options are yet to be exercised.

The employees are forecast to gain a maximum of 82.6 billion won by exercising the options for the 1.39 million shares, based on the 60,000 won upper price band. The strike price is 200 won per share.

Write to Jeong-Cheol Bae at bjc@hankyung.com

Jihyun Kim edited this article.