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(LEAD) Investors' response to IPO of BTS' agency weaker than expected

All News 14:19 October 06, 2020

(ATTN: RECASTS headline, lead; UPDATES with more info in paras 9-10, last 3 paras)

SEOUL, Oct. 6 (Yonhap) -- Big Hit Entertainment, the management agency of K-pop superstar BTS, attracted big deposits from retail investors on the last day for the subscription for its initial public offering (IPO) next week, but investors' interest was not as big as expected.

Since Monday, the company has allowed retail investors to subscribe to around 1.43 million shares, or 20 percent of its 7.13 million new stocks to be issued in the IPO scheduled for Oct. 15. The IPO price is 135,000 won (US$116).

Four IPO managers said individual investors deposited about 44.4 trillion won as of 2:00 p.m., with the shares oversubscribed by 462 times. The deadline for the two-day public subscription is 4:00 p.m.

Reflecting the global popularity of the K-pop band, retail investors have parked large amount of money for Big Hit shares up for grabs.

Retail investors wait at a brokerage house in the financial district of Yeouido, western Seoul, on Oct. 5, 2020, to subscribe to shares of Big Hit Entertainment, the management agency of K-pop superstar BTS, prior to its initial public offering (IPO) set for next week. (Yonhap)

The planned IPO has drawn keen interest from local investors, as BTS became the first South Korean artist in late August to top Billboard's Hot 100 singles chart with its disco-pop single "Dynamite."

The agency's share sale is regarded as this year's top three IPO deals in South Korea, along with biopharmaceutical blue chip SK Biopharmaceuticals and mobile game giant Kakao Games.

In September, Kakao Games attracted the largest-ever subscription deposits with 58.5 trillion won from retail investors. SK Biopharmaceuticals saw individual investors chip in 31 trillion won in deposits.

SK Biopharmaceuticals and Kakao Games made a strong market debut in July and September, respectively, finishing at more than double their IPO prices.

Market watchers said that compared to the craze for Kakao Games' market debut, individual investors seem to be less enthusiastic toward the subscription to the shares of BTS' agency due to the high IPO price.

This year, Korean retail investors have heavily invested in stock markets even by taking out loans amid a long streak of low rates.

Based on the IPO price, Big Hit Entertainment is forecast to raise 962.6 billion won through the scheduled public share offering, with its market value estimated to reach nearly 4.8 trillion won.

The projected market capitalization of Big Hit Entertainment is well above the combined market value of the nation's three major management agencies -- JYP Entertainment, YG Entertainment and SM Entertainment.

The agency's annual sales almost doubled to 587.2 billion won on-year in 2019 and posted an operating profit of 98.7 billion won.

This photo, provided by Big Hit Entertainment on Oct. 3, 2020, shows K-pop group BTS singing "Dynamite," its latest Billboard Hot 100 No. 1 hit, for the "BTS Week" special on NBC's "The Tonight Show Starring Jimmy Fallon" in the United States. (PHOTO NOT FOR SALE) (Yonhap)

Analysts said the agency's shares are likely to be included on the list of 200 major stocks listed on the main bourse soon after its market debut.

For an early inclusion in the KOSPI 200, the daily average market cap of a newly listed company should remain within the top 50 during the first 15 days after the IPO. The KOSPI 200 index is the KOSPI's subindex representing the 200 largest-cap stocks.

"The threshold for the market cap for an early inclusion currently stands at about 4.5 trillion won. There is a high possibility that the Big Hit shares will be included in the list," said Kim Dong-wan, an analyst at Eugene Investment & Securities Co.


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