Company Valuation of 240 Billion Won vs Net Profit of 12 Billion Won

Published 27 Oct.2025 15:56(KST)

Smilegate RPG IPO Failure Lawsuit
Dispute Over Conditions Triggering Obligation to Pursue Listing

In the lawsuit over damages resulting from the failed IPO of Smilegate RPG, the interpretation of the contractual conditions triggering the obligation to pursue a public listing has become a point of contention. Smilegate (the defendant) argued that net profit should be the standard, while Lynous Asset Management (the plaintiff) countered that the company’s valuation was the relevant condition.

Smilegate. Yonhap News

On October 23, at a hearing held by the 31st Civil Division of the Seoul Central District Court (Presiding Judge Nam Insu), Bae Sanghyuk, Executive Director at Lynous, appeared as a witness for the plaintiff and testified, “We agreed to pursue an IPO once the company valuation of Smilegate RPG reached 240 billion won, calculated by multiplying a net profit of 12 billion won by a price-to-earnings ratio (PER) of 20.”

In contrast, Lee Jinbeom, Chief Financial Officer (CFO) of Smilegate Holdings, who appeared as a witness for the defendant, rebutted, “The condition for the IPO obligation to arise was achieving a net profit of 12 billion won; the 20x PER is only relevant for calculating damages and has nothing to do with company valuation.”

When Lynous questioned, “The exemption condition for the IPO obligation is if Smilegate RPG’s company valuation is less than 233 billion won. Conversely, if the company valuation exceeds 233 billion won, shouldn’t the IPO be pursued?” CFO Lee responded, “I don’t see why those should be connected.”

Furthermore, when Lynous pressed for the basis of setting ‘12 billion won in net profit’ as the condition for triggering the IPO obligation for Smilegate RPG, CFO Lee replied, “There was internal discussion to set a stricter standard than the Korea Exchange’s listing requirements, so we set it at a monthly average of 1 billion won, totaling 12 billion won in net profit.”