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Shares of South Korea’s Kakao Bank surge more than 70% on first day of trading

Shares of South Korea’s Kakao Bank surge more than 70% on first day of trading

06 Aug 2021

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

JUNG YEON-JE | AFP via Getty Images

Shares of Kakao Bank shot up more than 70% during its market debut in South Korea on Friday.

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

Kakao Bank’s stock surged as high as 74.36% from its issue price on Friday. Some of those gains were later pared but the stock was last still trading more than 70% higher.

The gains for Kakao Bank came amid broader pressure in the South Korean markets, which saw the Kospi fall around 0.3%. Stocks affiliated to Kakao Bank also declined, with both Kakao Corp. and Kakao Games falling more than 2% each.

The public listing made Kakao Bank South Korea’s most-valued financial firm by market capitalization, according to local news agency Yonhap News.

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

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

“We’re different from the existing banks and we are creating new market opportunities,” he added. “One million customer(s) opened the mobile bank account with Kakao Bank in just five days over launch. Based on these figures, don’t you think Kakao Bank is certainly different from the incumbent banks?”

Kakao Corporation has a 31.62% stake in Kakao Bank as a majority shareholder, according to the bank’s IPO release in August. It became profitable in 2019 — just two years after launching its service in 2017.

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

Prior to its public debut, a few global firms had reached out to the digital lender to seek partnerships, Yun said.

“At that time, we prioritize to focus on domestic events and had limitations in capital to pursue global expansion,” he said. “However, post the IPO, we’ll actively seek global opportunities.”

On the firm’s future plans as it seeks to fend off competition from incumbents, Yun said it includes an initial expansion into the mortgage loans business for its banking service sector. Kakao Bank currently has 13 million monthly active users, according to Yun.

— CNBC’s Chery Kang contributed to this report.