Krafton sets IPO price at top end despite soft institutional demand

South Korean game developer Krafton Inc. set the initial public offering (IPO) price at the top end of the proposed band even as the largest domestic listing in the second half drew the weakest demand from institutional investors during a bookbuilding process than others this year.

Krafton priced its offering at 498,000 won ($434.4) per share, the top end of the indicative price range of 400,000 won and 498,000 won apiece, according to the company’s filing to a financial regulator on July 29.

The bookbuilding was 243 times oversubscribed, the lowest for listings in 2021, attracting 621 institutional investors during the process, which was conducted for 55-75% of the total shares offered, or 4.8 million-6.5 million stocks.

But the competition ratio may not be a key factor to set the IPO price, given the size of the listing, some investment banking (IB) sources said.

Among the institutional investors, 81.7% placed bids at higher than the indicative range. Some 22% of the institutions pledged to hold the shares in certain periods after the listing with 2.6% vowing to keep them in six months. Foreign investors made such commitments for 6.2% of shares ordered.

Earlier this month, it lowered the IPO share price from the initially proposed range of 458,000-557,000 won amid criticism over its high valuation followed by a request from the financial regulator to correct its registration statement. Its market capitalization will be 24.4 trillion won after the listing, becoming the country’s leading game stock, beating Nexon with 21.7 trillion won and NCSoft Corp. with 17.7 trillion won.

Retail investors are scheduled to place bids for the stock on Aug. 2-3 and it will be listed on Aug. 10.

Krafton plans to use the proceeds from the IPO to become a global content provider. The developer of PlayerUnknown’s Battlegrounds (PUBG) plans to use 70% of the proceeds for global buyouts and 15% for investment in other countries such as India.

Write to Ye-jin Jun at ace@hankyung.com
Jongwoo Cheon edited this article.