Korean gaming developer Lionheart is latest to shelve IPO plan

GAME developer Lionheart Studio Corp said it withdrew its plan to sell shares in Seoul as it struggled to obtain the desired valuation, becoming the latest South Korean company hit by a volatile market for initial public offerings (IPOs). 

The company and its shareholders, including Kakao Games Corp, sought to raise as much as 604.2 billion won (S$605.6 million) through the IPO, slated to be priced early next month. If shares had been sold at the top of the marketed range, it would be South Korea’s second-largest listing this year. 

Apart from the giant US$10.8 billion listing by LG Energy Solution in January, the number of IPOs and total proceeds raised in Seoul slumped this year compared to last year, as fears of inflation and global monetary policy tightening roiled markets. In the first half, companies such as security-services provider SK Shieldus Co and app-operator One Store Co withdrew their offerings, citing difficulty in obtaining desired valuations. 

Last month W-Scope Chungju Plant Co, a maker of battery parts used in electric vehicles, plunged 31 per cent in its debut in Seoul – even after cutting its IPO size by half. 

Kakaopay Corp, KakaoBank Corp and Kakao Corp, the ultimate parent, are among the worst performers in the blue-chip Kospi 200 Index this year, down 80 per cent, 72 per cent, and 58 per cent respectively. Kakao Games, which owns about 55 per cent of Lionheart Studio, slumped about 60 per cent this year to the lowest close since its debut in 2020. Kakao Games traded 1,300 won higher at 38,400 won in after-hour trading after the IPO withdrawal plan was announced.

The recent rout wiped out US$65 billion in market value from the four Kakao stocks this year, according to Bloomberg calculations.

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An Hyungjin, chief executive at the Seoul-based hedge fund, Billionfold Asset Management, said: “It’s hard to justify Kakao’s market value as the company has split and listed its units, including Kakaopay and KakaoBank.” BLOOMBERG