Business & Investment

Reuters makes its debut in South Korea’s Krafton, the maker of the hit game “PUBG”

© Reuters. File Photo: Photo of a player participating in PUBG Global Invitational 2018, the first official esports tournament of the computer game Player Unknown’s Battlegrounds held in Berlin, Germany on July 26, 2018. REUTERS / FabrizioBensch / File Photo

Joyce Lee and Scott Murdoch

Seoul / Hong Kong (Reuters)-The shares of Krafton Inc, a Korean company backed by Tencent Holdings behind the blockbuster video game PlayerUnknown’s Battlegrounds (PUBG), fell 20% from its IPO price at its debut on Tuesday. ..

Analysts said game companies faced uncertain prospects, overturned norms with new guidance and rules, and fell into high valuations and Chinese regulatory risk after Chinese regulators fell sharply in many industries. I thought.

Krafton is the first major South Korean listing since its debut, with shares not exceeding its initial public offering (IPO) price since the rise in floats last year.

The last share price in the morning transaction was 444,000 won, down 11% from the IPO price of 498,000 won, valued at about $ 18.9 billion.

Lists such as HYBE, formerly known as Big Hit and manager of K-Pop Group BTS, and battery material maker SKIE Technology Co Ltd (SKIET) were about to make their debut, but exceeded the IPO price on the first day of trading. rice field.

Krafton earned 87% of its revenue from Asia, excluding South Korea, in the January-March quarter. Analysts estimate that most of it comes from Tencent’s sales in China.

Krafton earns money from a profit-sharing scheme to provide technology services to “Peacekeeper Elite,” a game similar to “PUBG Mobile,” which is usually one of China’s top two-selling games. Said in IPO filing.

“About 70% (of sales) seems to come from Tencent,” Mio Kato, an analyst at LightStream Research, told Reuters.

“China is already making a fuss about (Tencent’s) Honor of Kings … If they demand a change to the” Peacekeeper Elite “, it’s negative and can be very big negative. ”

Stock prices of Tencent and the world’s game companies exposed to China, such as Activision Blizzard (NASDAQ :), plummeted after economic news reports affiliated with Xinhua called the online game “spiritual opium” last week.

Tencent soon said it would further limit minors’ access to its flagship video game, Honor of Kings.

Still, Krafton raised $ 3.75 billion in South Korea’s second-largest IPO, following the Samsung (KS :) Life Insurance float in 2010.

Approximately 65% ​​of IPO revenue will go to Krafton, who will use most of the money to acquire other gaming companies. The rest went to shareholders to monetize their investment.

There are larger services in the pipeline, such as EV battery maker LG Energy Solution and China’s Ant Financial-backed payment company KakaoPay, which are becoming a shocking year for Korean stock market floats.

($ 1 = 1,148.3100 won)

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Reuters makes its debut in South Korea’s Krafton, the maker of the hit game “PUBG” Reuters makes its debut in South Korea’s Krafton, the maker of the hit game “PUBG”

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