Kakao Games lose more investor confidence with Lionheart Studio IPO scheme

2022.05.09 13:32:58 | 2022.05.09 14:37:23

[Source: Kakao Games Corp. ]이미지 확대

[Source: Kakao Games Corp. ]

Kakao Games Corp lost further ground in stock price and investor confidence as it seeks IPO of Lionheart Studio, which developed its first blockbuster MMORPG “Odin: Valhalla Rising” last year, for the game name under Kakao family less than two years old as a public trading company and has done little since to lift the value of its stock.

Kakao Games, the video game publishing and developing unit of Korean internet giant Kakao, has appointed Korea Investment & Securities, NH Investment Securities JPMorgan, and Goldman Sachs to lead the initial public offering of its subsidiary Lionheart Studio.

On May 5, Kakao Games CEO Cho Kye-hyun had made Lionheart Studio’s IPO official during the earnings conference by emphasizing the company’s plan to accelerate Lionheart Studio’s efforts in game development and global expansion through funds raised from IPO.

Lionheart Studio is developer of “Odin: Valhalla Rising,” Kakao Game’s top grossing open world MMORPG launched in June last year. Kakao Games own controlling 51.95 percent stake in Lionheart Studio, with 30.37 percent additionally acquired in November last year.

The stock value of Kakao Games will inevitably fall without Lionheart Studio.

Analysts estimate Kakao Games to post 370 billion won ($290 million) in revenue for the April-June period this year with more than half of it, or 200 billion won, coming from Odin: Valhalla Rising.

Lionheart Studio is estimated to be worth 6 trillion won, based on analysts’ latest valuation for the game studio’s IPO. This is greater than Kakao Games’s market capitalization of 4.5 trillion won.

Kakao Games stock has been heavily tanked. Its shares are trading around 57,500 won on Monday, down nearly 30 percent from around 80,000 won in late March. Its share price is halved compared to 52-week of 116,000 won touched in November last year. The stock lost 8 percent alone on April 12 when the news of Lionheart Studio going public was out.

Lionheart Studio’s IPO is enraging Kakao Games shareholders who are already upset with the company’s moves since going public in September 2020. Kakao Games issued 50 billion won worth of convertible bonds, which can be exchanged for the company’s common stock, in March 2021, after raising 384 billion won through Kosdaq listing.

The convertible bonds issued in March already reached the date for bond holders to exercise the exchange option last month. More shares floating in the market can lead fall in the stock’s price.

By Pulse

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