KB Financial, 'Uneasy Jackpot' on Kakao Bank Listing... Internet Bank IPO Accelerates (Comprehensive)

KB Financial's Jackpot Investment in KakaoBank IPO... Threatening Competitors Raise 'Concerns'
K Bank and Toss Bank IPOs Also Gain Momentum

[Asia Economy Reporters Sunmi Park and Kiho Sung] With KakaoBank's listing in August, a seismic shift is expected in the market capitalization rankings of financial stocks, where KB Financial Group and Shinhan Financial Group currently hold the first and second positions respectively. As KakaoBank has announced that it will use the over 2 trillion KRW raised through its initial public offering (IPO) as a springboard for expanding its banking business, KB Kookmin Bank, the industry’s top bank and KakaoBank’s third-largest shareholder, 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 28th in preparation for its listing on the Korea Exchange on August 5. The desired offering price per share ranges from 33,000 to 39,000 KRW. Based on 475.1 million shares, the expected market capitalization post-listing is between 15.6783 trillion and 18.5289 trillion KRW.

This places KakaoBank third in market capitalization, following KB Financial Group (23.8 trillion KRW) and Shinhan Financial Group (21.6 trillion KRW). If KakaoBank’s stock price rises 30% above the top end of the offering price, it would surpass KB Financial Group to become the largest financial stock by market cap. 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 cap could soar to around 48 trillion KRW, exceeding the combined market caps of KB Financial Group and Shinhan Financial Group.

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

KakaoBank’s planned use of funds includes ▲ expanding its capital base to grow asset size including loans ▲ securing top talent and innovating customer experience ▲ enhancing financial consumer benefits ▲ research and development (R&D) in financial technology ▲ 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 loan products and scale, while expanding the convergence of finance and IT technology and 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

While KakaoBank’s listing poses a significant threat to KB Financial Group, it is also expected to bring substantial valuation gains from its shareholding, 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 top offering price, it could secure about 1.5 trillion KRW. This represents more than a fivefold gain compared to the 230 billion KRW total investment made since 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 all good news. With the capital raised through this listing, KakaoBank is better positioned to prepare for a full-scale confrontation with big tech companies, which commercial banks will perceive as a crisis."

K-Bank and Toss Bank Gain Momentum... Internet Banks Accelerate IPO Plans

With KakaoBank moving forward with its listing on the Korea Exchange, it is expected that K-Bank and Toss Bank will also accelerate their stock market challenges. The next likely candidate is K-Bank, Korea’s first internet-only bank. Although K-Bank has not publicly disclosed its IPO plans, it aims to turn profitable next year and go public in 2023. If it fails to IPO by 2023, its largest shareholder BC Card will have to buy out the financial investors’ stakes.

However, if K-Bank achieves profitability sooner than expected, the listing could be expedited. Last year, fueled by the cryptocurrency boom, K-Bank reduced its net loss in Q1 this year to 12.3 billion KRW, about half of the 24 billion KRW loss in the same period last year. Recently, it increased its capital base through a large-scale paid-in capital increase of 1.25 trillion KRW.

Toss Bank, scheduled to launch in September, also has a high possibility of an IPO.

The financial authorities, when approving Toss Bank, imposed a condition requiring the bank to faithfully implement its capital increase plans until it reaches breakeven, expected in 2025. It is widely believed that once profitability is achieved, Toss Bank will promptly proceed with an IPO. Thus, 2025 is anticipated as the breakeven year. If profitability is reached earlier, the IPO timeline could be accelerated. Previously, Toss Bank CEO Min-taek Hong said, "We are not currently considering an IPO," but added, "Raising large-scale funds through an IPO during the capital increase process remains an open option."

If the IPO roadmaps for K-Bank and Toss Bank proceed smoothly following KakaoBank, all three internet-only banks will be listed by 2025.

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