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SEOUL, South Korea, Oct. 25, 2021 /PRNewswire/ -- "Our ultimate goal is to empower users by placing a wide suite of financial services at their fingertips just with Kakao Pay, without the hassle of having to download multiple applications."
Kakao Pay is going public on November 3 to accelerate its transition into all-encompassing mobile financial service platform.
"Kakao Pay is fundamentally a financial platform, and we seek to maintain symbiotic relationships of mutual growth with other financial institutions," said Alex Ryu, CEO of Kakao Pay at the online press conference held on Monday. "Since the digital convergence is accelerated in all areas including online payment and financial services, we expect to increase our market share significantly through unrivalled number of users and the wide ecosystem of cooperative companies supported by our superior technology."
Kakao Pay is offering a total of 17 million shares planning to raise up to 1.530 trillion KRW in the IPO. Through the bookbuilding process of the institutional investors conducted from October 13 to 21, the offering price has been fixed at 90,000 KRW, the upper limit of the price band. Kakao Pay will make its debut on KOSPI on November 3 after receiving subscriptions from retail investors from October 25 to 26. The main underwriters for the deal are Samsung Securities, JP Morgan, and Goldman Sachs, with joint bookrunner Daishin Securities. Korea Investment & Securities and Shinhan Investment will be joining as co-managers.
Starting off with Korea's first Digital Payment service, Kakao Pay has grown into a leading mobile financial platform in Korea. Using two distinguished platforms, Kakao Talk messenger app and Kakao Pay app, Kakao Pay retains over 36.5 million users with MAU of 20 million. Moreover, the company has over 127 partnerships with financial institutions, securing its strong presence in the market as a financial platform.
The total transaction volume of Kakao Pay is showing fast growth as well. The company recorded a total transaction volume of 85 trillion KRW for twelve months from the second half of last year, and the revenue has surpassed 102% over the past 2 years.
In addition, one of the biggest competitive edges of Kakao Pay is that it can create massive synergies with the greater Kakao ecosystem.
After acquiring an immense user base through easy pay and money transfer services that are effective traffic builders, Kakao Pay lock-in these users into the Kakao Pay platform by providing essential daily life services such as bill payment, membership, e-document, and authentication, the company explained. Kakao Pay is providing a wide suite of financial and wealth management services with its subsidiaries including loans, investments, and insurance to these acquired users.
Kakao Pay's user engagement also continues to get strengthened over time. The proportion of users who use 3 or more services in Kakao Pay has increased significantly in 3 years from 21.9% to 55.5%. This suggests that the users are expanding beyond traffic building services like money transfer and payment to take advantage of the company's wide range of financial services.
Based on these performances, Kakao Pay has managed to achieve profitability. The company recorded 8.2 billion KRW in EBITDA in the first half of 2021. Digital Finance revenue was only 2% of the total revenue in 2019, but it has dramatically increased up to 32% in the first half of 2021 taking approximately one-third of the total revenue. Kakao Pay said it will keep on diversifying its revenue stream and sustain its stable growth.
To successfully penetrate Kakao Pay's Total Addressable Market (TAM), the company is preparing to launch diverse new services and functions. To begin with, Kakao Pay is going to establish a digital non-life insurance subsidiary and provide new innovative insurance products for the digital economy. Also, Kakao Pay Securities will soon launch the Mobile Trading System. For loan service, Kakao Pay aims to offer a value-added credit scoring model for those with insufficient financial records and diversify its loan brokerage portfolios such as credit-card loan and secured loan. Preparations for Korea's first prepayment-deferred payment combined mobile transportation card designated as Innovative Financial Service by Financial Services Commission is under way as well.
With the beginning of MyData era, Kakao Pay's Personal Financial Management service is expected to undergo further advancements. By providing personalized analysis service and customized options, the service will be equipped with better financial asset overviews, in-depth income and spending analysis, working as an AI financial advisor for users' financial needs.
The global expansion of Kakao Pay will also gain more speed. The company will carry on discovering new growth engines that could capture 30 trillion KRW worth of global markets.
Since Kakao Pay's fintech leadership has been built on industry-leading technology, the company will keep on pursuing its technical development. Kakao Pay stressed its plans to utilize AI & Deep Learning technology, blockchain-based authentication, and biometric recognition technologies to ensure that users can safely use its' financial services.
The IPO proceeds will be used based on the growth strategies mentioned above. "Funds raised for acquisition of securities of other corporation will be used to expand the securities retail business and capital of digital non-life insurance company, build partnerships and equity investments in e-commerce, and M&A of promising fintech companies," said an official of Kakao Pay. "Working funds will be used to expand offline payment infrastructure and operating Buy Now Pay Later (BNPL) service."
