South Korea’s video-game maker undershoots in IPO
02/07/2021 03:46
(The author is a Reuters Breakingviews columnist. The opinions
expressed are their own.)
HONG KONG, July 2 (Reuters Breakingviews) - In the
survival-themed hit game "PlayerUnknown's Battlegrounds",
players shoot their way to victory. Parent Krafton 259960.KS ,
however, missed its target in its initial public offering. The
Tencent-backed 0700.HK company cut the deal size urn:newsml:reuters.com:*:nL2N2OD0IJ
after South Korea's regulator warned it needed to revise its
filings. Local media reports that Krafton's ambitious valuation
was probably the reason.
In its revisions, Krafton notably removed companies like
Walt Disney DIS.N and Warner Music Group WMG.O from its peer
group. At the top of the latest indicative price range, Krafton
will raise $3.8 billion, down from the initial target of as much
as $4.9 billion. That implies an equity valuation of up to $21.5
billion, according to analyst Sanghyun Park, who publishes on
SmartKarma, or 36 times the company's own forecast 2021
earnings.
That's broadly in line with South Korean gaming rivals
urn:newsml:reuters.com:*:nL4N2M2170 like Kakao Games 293490.KQ and NetMarble
251270.KS . Unlike Disney, which spans films, theme parks and
more and trades on a much richer multiple, Krafton relies on the
PUBG franchise for most its revenue. The company may have
broader future ambitions, but that’s another game. (By Robyn
Mak)
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(Editing by Una Galani and Sharon Lam)
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