Krafton cuts IPO target to $3.8 bn after regulator’s request

South Korean video game company Krafton reduced its $5 billion IPO target to $3.8 billion after a regulator requested the PUBG-maker to revise its IPO registration statement.

In mid-June- Krafton announced plans to raise as much as 5.6 trillion won (around $5 billion) selling over 10 million shares at 458,000 won to 557,000 won per share. This was expected to be South Korean’s biggest IPO ever. 

However, the financial regulator requested the company to revise its registration statement as it’s ‘’fallen into one of three possible categories: not have had a proper format; contained false information or an omission of important facts; or included unclear statements that might undermine investors’ reasonable judgment or lead to serious misunderstanding,’’ as reported by Reuters. Two sources said this would delay the IPO for two weeks. 

In its revised registration statement, Krafton said it’ll sell 8.7 million shares at 400,000-498,000 won per share. This would bring the company 4.3 trillion won ($3.8 billion), which is 1.3 trillion won less than the previous offer and would give the company a market cap capitalization of around $21 billion. 

The company now plans to go public in early August. 

“Krafton’s initial IPO pricing was too high considering the fact that most of the company’s revenue comes from a single game,” said Hwang Hyun-jun, an analyst at DB Financial Investment.

“There were also some concerns about the royalties it receives from China, which led authorities to advise the company to revise down the IPO price,” he added.

Krafton generates 97% of its revenue from the hit battle royal title PUBG Mobile. In March this year, the game surpassed $5 billion in lifetime player spending and 1 billion in global downloads. The game also sold over 75 million copies for PC and consoles.

Also Read: PUBG Mobile Revenue and Usage Statistics

In addition to PUBG Mobile, the company is now getting ready to launch 2 new titles which are PUBG: New State, which surpassed 5 million pre-registration within a week, and Battlegrounds Mobile India, PUBG Mobile’s India replacement for which an Indian politician recently requested a new ban.

Krafton is also expanding into new areas including, artificial intelligence, deep learning, web-based cartoons, movies and animation.