South Korea’s fintech stretches valuation limits

KakaoBank

02/09/2021 06:12

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are their own.)
    MELBOURNE, Sept 2 (Reuters Breakingviews) - South Korea’s
financial technology mania has reached new heights. The
payments-to-wealth management arm of super-app owner Kakao cut
the price range of its initial public offering https://www.prnewswire.com/news-releases/kakao-pay-files-an-updated-prospectus-for-ipo-in-october-301365800.html
 by roughly 6% after regulators ordered it  urn:newsml:reuters.com:*:nL1N2OY027 to
revise its filings. Kakao Pay’s enterprise will now be worth as
much as about $10 billion, or 27 times 2021 annualised sales.
Brazilian fintech services PagSeguro  PAGS.N  and StoneCo
 STNE.O  and American e-lender Upstart  UPST.O  trade at an
average 16 times.
    The company’s edge is its $60 billion parent. As of June,
Kakao’s messaging platform boasted 46 million local users –
nearly 90% of South Korea’s population. That has turbocharged
payments growth: transactions have been expanding at an annual
rate of 89% since 2018 and hit 12.5 trillion won ($108 billion)
last year, according to analysts at Daiwa. 
    Dizzying valuations have become a norm in South Korea’s hot
fintech sector  urn:newsml:reuters.com:*:nL1N2P6066. Affiliate Kakao Bank  323410.KS ,
whose shares jumped 80% on their debut last month, now fetches
15 times book value, well above traditional lenders. But
justifying those sums requires creative evaluations. (By Robyn
Mak)

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