(Bloomberg) -- Online lender K Bank Co. has withdrawn its $700 million-plus initial public offering in Seoul amid concerns over high valuation and dependency on a cryptocurrency operator for its funding.
K Bank failed to generate enough demand for listing during the recent bookbuilding, the Seoul-based company said in a regulatory filing on Friday. The lender plans to revive the IPO early next year after changing details such as the number of shares on offer, the company said in a separate statement.
The company had planned to price the offering Friday, with a debut scheduled for Oct. 30. A successful listing would have made it South Korea’s largest IPO in more than two-and-half years and valued the bank at up to 5 trillion won ($3.6 billion). The company was seeking to raise as much as 984 billion won by selling 82 million shares and use the proceeds for general working-capital purposes and technology investments.
The withdrawal came after concerns over valuation and its reliance on a cryptocurrency exchange for deposits. Korea Economic Daily earlier reported arrangers had asked K Bank to set the IPO price below the marketed range at 8,500 won a share. K Bank did not offer any comments on the IPO pricing.
“Even if the IPO is priced at 8,500 won, we would pass on this IPO,” said Douglas Kim, an analyst who publishes on the Smartkarma platform.
Kim said the company’s valuation multiples are similar to that of its peer, KakaoBank Corp. But KakaoBank has posted better net margins and appear to have had more consistent operating margins in the past three years, he added. “Given these factors, it is difficult to argue a premium valuation multiple for K Bank relative to Kakao Bank,” Kim said in a note.
K Bank, which has been able to rapidly expand its customer base by partnering with the country’s largest cryptocurrency exchange Upbit, faces the expiration of contract with the exchange in October next year. Upbit’s deposits accounted for 16.8% of total K Bank’s deposits as of end-June. K Bank has said in the IPO prospectus that failure to extend the partnership with a key strategic partner may weaken the competitiveness of its platform.
IPOs in South Korea have raised $1.23 billion so far this year, more than in all of 2023 but a far cry from the $15.2 billion from 2021. Other Korean companies seeking to list shares include artificial-intelligence chip startup Rebellions Inc., which is inviting global banks to help underwrite its offer as early as 2025. LG CNS Co., the information-technology services arm of LG Group, is also gearing up for a Seoul IPO as early as next year.
The listing would have been South Korea’s biggest since battery maker LG Energy Solution Ltd.’s $10.7 billion deal in January 2022, according to data compiled by Bloomberg.
K Bank posted net income of 85.4 billion won for the first half of the year, more than three times the amount in the same period in 2023, according to a filing last month.
NH Investment & Securities Co., KB Securities Co. and Bank of America Corp. are arranging K Bank’s IPO.
(Adds analyst comments in paragraph 5 and 6, South Korea’s IPO tally in paragraph 7, and context throughout)
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