The firm behind the blockbuster video game “PlayerUnknown’s Battlegrounds” (PUBG) in South Korea, Krafton, lowered its IPO objective by nearly a quarter on Thursday after a regulator warned it needed to alter its paperwork. Tencent Holdings Ltd is the company’s second-largest stakeholder, and the indicated price range for its 8.7 million share offering has been revised to 400,000-498,000 won per share.
The offering would raise 4.3 trillion won (US$3.8 billion) at the top end of the range. That compared to a previous target of up to 5.6 trillion won, which, if met, would have set a new record for South Korean initial public offerings. Last Monday, the Financial Supervisory Service of South Korea warned Krafton that company needed to resubmit its documentation, although it did not say why. Krafton, whose online multiplayer war-fighting game generates 97% of its operating profit, said in a statement that it had discussed the topic with its consultants “so that we may acquire a reasonable market evaluation.” “Considering that the majority of the company’s revenue originates from a single game, Krafton’s initial IPO pricing was too high,” said Hwang Hyun-jun, an analyst at DB Financial Investment.
“There were also some concerns about the royalties it receives from China,” he said, adding that officials advised the company to lower the IPO price.
This year, Krafton plans to produce two PUBG-related games: “PUBG: New State,” a smartphone game, and “Battlegrounds Mobile India,” a mobile game.
The company is now branching out into sectors including web-based cartoons, films, and animation.
In 2020, it generated 1.67 trillion won in revenue, up 54% from the previous year, and its operating profit more than doubled to 774 billion won.
(1 US dollar = 1,131.4000 Korean won)
(Heekyong Yang and Jihoon Lee contributed reporting; Edwina Gibbs edited the piece.)/n
