Kakao Bank Approaching 2 Trillion KRW IPO Capital... Injects 1.5 Trillion KRW to Secure Capital Adequacy

[Asia Economy Reporter Kiho Sung] As KakaoBank prepares for its IPO next month, attention is focused on how the large-scale funds secured through this will be used. KakaoBank plans to use these funds not only to secure capital adequacy and acquire talented personnel but also for fintech company mergers and acquisitions (M&A), financial technology research and development (R&D), and global expansion.

According to KakaoBank on the 18th, the securities registration statement indicates that KakaoBank will issue 65.45 million new shares through the IPO. The desired public offering price ranges from 33,000 to 39,000 KRW per share, expecting to secure at least approximately 2.1599 trillion KRW in funds.

The securities registration statement states that KakaoBank plans to use the raised funds starting this year for securing capital adequacy, acquiring talented personnel, innovating customer experience, enhancing financial consumer benefits, and financial technology R&D, as well as for fintech company M&A. Additionally, it revealed plans to invest funds from 2023 for promoting global expansion.

First, more than 1.5 trillion KRW will be invested to secure capital adequacy. As internet-only banks competitively expand credit loans for medium- and low-credit borrowers, and KakaoBank also plans to launch various products such as mortgage loans, it is necessary to increase equity capital for this purpose.

Furthermore, KakaoBank explained that over the next three years, it will invest ▲ 50 billion KRW in acquiring talented personnel ▲ 50 billion KRW in obtaining permits and operating expenses related to platform business ▲ 150 billion KRW in enhancing financial consumer benefits (advancing personal credit evaluation systems, expanding customer contact points and infrastructure such as customer centers, strengthening consumer protection) ▲ 100 billion KRW in financial technology R&D. In addition, from 2023, it plans to invest 200 billion KRW in fintech company M&A and 50 billion KRW in global expansion.

The evaluation gains from stock options held by executives and employees are also a point of interest. According to the securities registration statement, the total unexercised stock options granted to executives and employees amount to 2,672,800 shares.

KakaoBank distributed 5.2 million stock options to 144 employees at the end of March 2019. CEO Yoon Ho-young received 520,000 shares, Kakao Vice Chairman Kim Joo-won received 400,000 shares, and CTO Jung Kyu-don received 224,000 shares. The remaining 135 employees shared 2.96 million shares. The distribution varied depending on the year of joining and job roles.

The exercise price for stock options is 5,000 KRW per share, and the exercise period lasts until March 25, 2026. After listing, executives and employees can purchase common shares at 5,000 KRW per share and realize gains.

In CEO Yoon’s case, based on the upper limit of the desired public offering price range, it is expected that he could realize gains of approximately 17.7 billion KRW. However, it is unlikely that CEO Yoon will exercise stock options immediately after the listing.

Currently, the number of unexercised stock options held by 135 employees is 1,278,800 shares. Simply dividing this quantity by the number of employees means an average of about 9,500 shares per person, and based on the upper limit of the desired public offering price, it is estimated that each could gain up to approximately 300 million KRW.

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