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W58.4tr flows into BTS agency’s stock preorders

Analysts say investors’ response didn’t quite live up to market anticipation

Retail investors wait to apply for the public subscription of Big Hit Entertainment’s stocks on the second day of the K-pop agency’s initial public offering at a brokerage office in Seoul, Tuesday. (NH Investment & Securities)
Retail investors wait to apply for the public subscription of Big Hit Entertainment’s stocks on the second day of the K-pop agency’s initial public offering at a brokerage office in Seoul, Tuesday. (NH Investment & Securities)

Big Hit Entertainment, the agency behind K-pop sensation BTS, closed a two-day retail subscription Tuesday for its long-awaited initial public offering. Retail investors had submitted some 58.42 trillion won ($50.26 billion) in deposits for stock preorders.

Despite anticipation by market watchers who thought the K-pop agency would set a record for subscription deposits, the accumulated amount was a little less than the figure seen during the public subscription of Kakao Games -- some 55.55 trillion. But as nearly 50 trillion won had flowed into brokerages handling the general subscription, it almost tied the record for the largest subscription in South Korea’s IPO history.

The average competition at the four local brokerages -- NH Investment & Securities, Korea Investment & Securities, Mirae Asset Daewoo and Kiwoom Securities -- recorded 606.97 to 1, as retail investors rushed to deposit their funds in the afternoon.

Ahead of the planned listing on the nation’s main bourse, Kospi, Oct. 15, the management agency has drawn keen interest from investors both at home and abroad. Fueled by the global popularity of BTS, it is also widely expected to be among this year’s top three IPO deals in Korea, along with SK Biopharmaceuticals and Kakao Games.

Around 1.42 million shares, accounting for 20 percent of the company, are set to be sold to retail investors under the planned IPO with an offering price of 135,000 won per share.

As the target price set by local brokerage houses is between 160,000 won and 380,000 won, some local analysts forecast that the firm is likely to obtain early admission in December to the Kospi 200 -- a basket of the top 200 blue-chip stocks of the nation’s benchmark index, Kospi -- based on its projected market capitalization of 4.8 trillion won after listing.

Kim Dong-wan, an analyst at Eugene Investment & Securities, said acceptance to the Kospi 200 hinges on a market cap of at least 4.5 trillion won, or 133,920 won per share. Since Big Hit’s offering price has already met that threshold, the firm’s debut on the index is anticipated Dec. 11.

By Jie Ye-eun (yeeun@heraldcorp.com)
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