SEOUL, July 1 (Reuters) – South Korea’s Krafton, the company behind the hit video game “PlayerUnknown’s Battlegrounds” (PUBG), cut its IPO target by nearly a quarter on Thursday after that a regulator has warned that it must revise its documents.
The company, which counts Tencent Holdings Ltd (0700.HK) as its second largest shareholder, revised the indicative price range for its stock offering from 8.7 million to 400,000-498,000 won per share.
At the high end, the offering is said to bring in 4.3 trillion won ($ 3.8 billion). This compares to its previous target of 5.6 trillion won which, if met, would have been a record for South Korean IPOs.
South Korea’s financial monitoring service asked Krafton last week to resubmit his documents, although he did not disclose the reasons for the order.
Krafton, which derives 97% of its operating profit from its online multiplayer war game, said in a statement that he discussed the matter with his advisers “so that we can receive a reasonable assessment of the market.”
“The initial price of Krafton’s IPO was too high considering that most of the company’s revenue comes from a single game,” said Hwang Hyun-jun, analyst at DB Financial Investment.
“There were also concerns about the royalties it collects from China, which led authorities to advise the company to downgrade the price of the IPO,” he said. .
Krafton plans to release two PUBG related games this year – a mobile game “PUBG: New State” and “Battlegrounds Mobile India”.
The company is also expanding into areas such as cartoons, films, and web-based animation.
It reported 2020 revenue of 1.67 trillion won, up 54% from the previous year, and its operating profit more than doubled to 774 billion won.
($ 1 = 1,131 4,000 won)
Reporting by Heekyong Yang and Jihoon Lee; Editing by Edwina Gibbs
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