Shares of South Korea’s Kakao Bank jump 70% on trading debut

A forex trader monitors exchange rates in a trading room at KEB Hana Bank in Seoul on June 21, 2021.

YOUNG YEON-JE | AFP via Getty Images

Kakao Bank shares rose more than 70% on their market debut in South Korea on Friday.

Kakao Bank is South Korea’s first digital bank to go public and the country’s largest public offering since Netmarble’s IPO in 2017.

The Kakao Bank share rose to 74.36% compared to its issue price on Friday. Some of those gains were later reduced, but the stock was still trading more than 70% higher last.

Kakao Bank gains came amid wider pressure in South Korean markets, where the Kospi fell about 0.3%. Kakao Bank-related stocks also fell, with both Kakao Corp. and Kakao Games each fell more than 2%.

According to local news agency Yonhap News, Kakao Bank became the highest-rated financial company in South Korea by market capitalization.

In an exclusive interview with CNBC, Kakao Bank CEO Yun Ho-young denied concerns about whether the IPO was overvalued.

“I think the IPO price is largely determined by the market, Kakao Bank is a bank in the mobile age,” he said.

“We are different from the existing banks and are creating new market opportunities,” he added. “One million customers opened the mobile bank account at Kakao Bank in just five days after the launch. Do you think that these numbers make Kakao Bank no different from the established banks?”

As the majority shareholder, Kakao Corporation holds 31.62% of the shares in Kakao Bank, according to the publication of the bank’s IPO in August. It turned profitable in 2019 – just two years after the service launched in 2017.

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Yun said the bank hopes to expand beyond South Korea after the listing.

Before its public debut, some global companies had reached out to the digital lender for partnerships, Yun said.

“At the time, we were primarily focused on domestic events and had capital constraints to drive global expansion,” he said. “However, we will be actively looking for global opportunities after the IPO.”

Speaking of the company’s future plans to fend off competition from established companies, Yun said it has an initial expansion into the mortgage lending business for its banking services sector. According to Yun, Kakao Bank currently has 13 million monthly active users.

– CNBC’s Chery Kang contributed to this report.

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