Why Did Kakao Bank Exclude Domestic Banks from Its Peer Group?

"There Is a Fundamental Difference in Licensing Aspects Between Financial Holding Companies and Banks"

[Asia Economy Reporter Park Sun-mi] As concerns arise that the initial public offering (IPO) price of KakaoBank, which is preparing for listing, is excessively high compared to commercial banks, KakaoBank has ultimately selected only four foreign fintech companies as its peer group instead of domestic banks.

According to the amended securities registration statement submitted by KakaoBank to the Financial Supervisory Service on the 19th, the peer companies are four firms: U.S. mortgage company Rocket Companies, Brazilian financial technology solutions provider PagSeguro, Russian fintech company TCS Group Holdings, and Swedish financial firm Nordnet. Applying their average PBR of 7.3 times, KakaoBank's enterprise value is estimated to be up to KRW 18.5289 trillion.

Regarding the reason for not limiting the peer group to domestic listed financial holding companies and banks primarily engaged in banking when selecting comparable companies for this offering, KakaoBank stated, "Internet-only banks fundamentally differ from traditional financial holding companies and banks in terms of licensing, as they operate 'at the convergence of finance and information and communication technology' and conduct banking business through electronic financial transactions.

Furthermore, they added, "There is also a difference in that ICT companies can establish an innovative governance structure allowing them to hold up to 34% of issued shares. The fundamental differences in licensing and laws between internet-only banks and traditional banks are not merely about the presence or absence of offline branches but culminate in differentiated forms of workforce composition, product planning, marketing methods, branches, IT infrastructure, and various operational assets that combine characteristics of banks and IT platforms."

This emphasizes that as an independent financial platform, KakaoBank has developed distinctive business characteristics compared to existing banks, including comprehensive partnerships beyond affiliates within a holding company, cost structure efficiency, and maximization of network effects through IT platforms.

KakaoBank also stated, "The scalability as a financial platform based on a large number of monthly active users (MAU) and the resulting high growth potential are reasons why it cannot be simply compared to existing banks. Our company has the highest MAU among all financial sector mobile apps, including banks."

Meanwhile, KakaoBank plans to complete demand forecasting for domestic and international institutional investors and finalize the IPO price on the 21st.

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