South Korea’s video-game maker undershoots in IPO

Players are pictured on video screen as they attend the PUBG Global Invitational 2018, the first official esports tournament for the computer game PlayerUnknown’s Battlegrounds in Berlin, Germany, July 26, 2018.

HONG KONG, July 2 (Reuters Breakingviews) – In the survival-themed hit game “PlayerUnknown’s Battlegrounds”, players shoot their way to victory. Parent Krafton (259960.KS), however, missed its target in its initial public offering. The Tencent-backed (0700.HK) company cut the deal size read more after South Korea’s regulator warned it needed to revise its filings. Local media reports that Krafton’s ambitious valuation was probably the reason.

In its revisions, Krafton notably removed companies like Walt Disney (DIS.N) and Warner Music Group (WMG.O) from its peer group. At the top of the latest indicative price range, Krafton will raise $3.8 billion, down from the initial target of as much as $4.9 billion. That implies an equity valuation of up to $21.5 billion, according to analyst Sanghyun Park, who publishes on SmartKarma, or 36 times the company’s own forecast 2021 earnings.

That’s broadly in line with South Korean gaming rivals read more like Kakao Games (293490.KQ) and NetMarble (251270.KS). Unlike Disney, which spans films, theme parks and more and trades on a much richer multiple, Krafton relies on the PUBG franchise for most its revenue. The company may have broader future ambitions, but that’s another game. (By Robyn Mak)

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Editing by Una Galani and Sharon Lam

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