KB Financial's Jackpot Investment in KakaoBank IPO... 'Anxiety' Over Emergence of Threatening Competitors

KB Kookmin Bank Invests 230 Billion Won, Secures About 1.5 Trillion Won in 5 Years
If Kakao Bank's 'Ttang Sang' Succeeds, Investment Returns Will Jump Further

[Asia Economy Reporter Park Sun-mi] The August listing of KakaoBank is expected to bring significant changes to the market capitalization rankings of financial stocks, where KB Financial Group and Shinhan Financial Group currently hold the first and second positions, respectively. Since KakaoBank has announced that it will use the over 2 trillion won raised through its initial public offering (IPO) as a foundation for expanding its banking business, KB Kookmin Bank, the industry’s top bank and the third-largest shareholder of KakaoBank, finds itself in a bittersweet position?facing a formidable competitor while also gaining substantial unrealized valuation gains.

According to financial industry sources on the 29th, KakaoBank submitted its securities registration statement to the Financial Services Commission on the previous day in preparation for its listing on the Korea Exchange on August 5. The desired public offering price per share is set between 33,000 and 39,000 won. Based on 475.1 million shares, the expected market capitalization after listing is estimated to be between 15.6783 trillion and 18.5289 trillion won.

This places KakaoBank third in market capitalization, following KB Financial Group (23.8 trillion won) and Shinhan Financial Group (21.6 trillion won), the top two financial holding companies in South Korea. If KakaoBank’s stock price rises 30% above the top end of the offering price range, it would surpass KB Financial Group to instantly claim the top spot among financial stocks. Should it achieve the so-called “ttasang” (a phenomenon where the opening price is double the IPO price followed by a limit-up), the market capitalization could soar to around 48 trillion won, exceeding the combined market caps of KB Financial Group and Shinhan Financial Group.

KakaoBank is not only a threat to KB Financial Group in the stock market but also in terms of industry competitiveness. The amount KakaoBank expects to raise through this IPO ranges from 2.1598 trillion to 2.5525 trillion won. Even after deducting issuance costs based on the lowest offering price, the net proceeds will be at least 2.1393 trillion won.

KakaoBank’s planned use of funds includes ▲ expanding its capital base to increase asset size including loans ▲ securing top talent and innovating customer experience ▲ enhancing financial consumer benefits ▲ conducting financial technology research and development (R&D) ▲ mergers and acquisitions (M&A) in fintech ▲ and global expansion. As an internet-only bank, it will focus on expanding unsecured loans to middle- and low-credit borrowers, but by strengthening its capital, it aims to diversify and increase the scale of loan products and expand the convergence of finance and IT technologies as well as its platform ecosystem. This clearly positions KakaoBank as a competitor in the same league as KB Kookmin Bank.

KB Kookmin Bank’s Smart Investment... Substantial Valuation Gains on Shares

While KakaoBank’s listing poses a significant threat to KB Financial Group, it is also expected to bring considerable valuation gains on its shareholdings, which is a positive factor.

KB Kookmin Bank currently holds 38,097,959 shares (9.30% stake) of KakaoBank, making it the third-largest shareholder after Kakao and Korea Investment Value Asset Management. It is the only commercial bank holding shares in KakaoBank. Based on the upper limit of the desired offering price, it could secure about 1.5 trillion won. This means it could realize more than five times the profit compared to its total investment of 230 billion won since its initial investment in 2016. However, KB Kookmin Bank does not plan to sell its shares immediately after the listing to realize investment gains.

An industry insider said, “While KakaoBank’s listing will trigger a successful investment ‘jackpot’ for KB Kookmin Bank as the value of its shares rises, it is not a situation to be entirely happy about. Since KakaoBank will have secured the financial capacity to utilize funds, commercial banks preparing for a full-scale confrontation with big tech companies will perceive this as a crisis.”

This content was produced with the assistance of AI translation services.