Delayed IPO KakaoPay Faces 'Red Light' on Large-Scale Investment Plans

Authorities Request Amendment to Securities Registration Statement
Plan Disrupted Due to 135-Day Rule
IPO Schedule Under Review for Post-September Delay

[Asia Economy Reporter Kiho Sung] Kakao Pay's planned listing next month has been postponed to after September due to the financial authorities' request for corrections to the securities registration statement, making it inevitable that the large-scale investment plans scheduled for the second half of the year will also face setbacks. Because of this, voices of criticism are emerging within the financial industry, stating that the financial authorities' correction request has affected the company's business plans.

According to the financial industry on the 21st, Kakao Pay is considering postponing its initial public offering (IPO) schedule to as late as after September. This is due to the so-called '135-day rule,' which requires companies conducting an IPO to complete the listing procedures, including payment, within 135 days from the date of preparing the financial statements. Originally, this rule is from the U.S. Securities and Exchange Commission (SEC), and domestic companies attracting U.S. investors also follow the '135-day rule.'

Kakao Pay initially planned to finalize the public offering price through institutional investor demand forecasting on the 29th to 30th of this month, followed by general subscription on the 4th to 5th of next month. The listing was scheduled for the 12th of next month. However, on the 16th, the Financial Supervisory Service requested corrections to the securities registration statement, causing delays in the schedule.

According to the 135-day rule, since Kakao Pay prepared its financial statements based on the first quarter, it must complete the listing by the 13th of next month, which is the 135th day. However, given the request for corrections to the securities registration statement, meeting this deadline has become practically impossible. Since the corrected securities registration statement has not yet been submitted, the first quarter accounting data has become invalid. Therefore, Kakao Pay must newly prepare the securities registration statement based on the semi-annual results, which will be announced around mid-next month.

With the IPO schedule significantly delayed, changes to Kakao Pay's business plans have become inevitable. Originally, Kakao Pay had planned to use the funds raised from the IPO to promote the mobile trading system (MTS), capital expansion of a digital non-life insurance company, expansion of payment infrastructure, and launch of a postpaid transportation service in the second half of the year.

The financial authorities' correction request without prior notice is also controversial. The correction request for Kakao Pay's securities registration statement was disclosed around 2 p.m. on the 16th without any prior warning. According to the 135-day rule, to complete the listing by August 13th, Kakao Pay had to submit the corrected registration statement by the 19th. This is because the securities registration statement becomes effective 15 business days after submission. However, with the correction request coming on the 16th, there were only 4 days left to make corrections. Given that the Financial Supervisory Service has not clearly explained the reasons for the correction request, it is not easy to make corrections within such a short time. For now, Kakao Pay has stated that it will "faithfully comply with the Financial Supervisory Service's correction request."

A financial industry official pointed out, "Due to the financial authorities' tight and vague correction request, Kakao Pay is not only affected by changes in the listing schedule but also significantly impacted in its overall business plans for the second half of the year," adding, "If such incidents repeat, there is concern that Korean companies may turn their eyes to overseas stock markets, like Coupang, which is listed on the New York Stock Exchange."

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