KakaoBank drops to record as holder seeks RM1.4b in block

SHARES of KakaoBank Corp, a South Korean online-only lender, tumbled as much as 13% to a record low after one of its key shareholders sought to raise US$320 million (RM1.43 billion) in a block trade.

Kookmin Bank offered about 14.8 million shares in a club deal, according to terms of the deal obtained by Bloomberg News. The lender sold shares at 28,704 won each at a discount of about 8% from the closing price on Thursday.

KakaoBank shares were down 7.4% at 28,900 won as of 12:30pm in Seoul. Kookmin Bank will hold a 4.9% stake after the block sale, according to terms, down from an 8% stake that had made it the third-largest shareholder.

“Kookmin Bank probably wanted to protect its capital from worsening as its other comprehensive income shrank due to KakaoBank’s share price decline,” said Choi Chunguk, an analyst at Hana Financial Investment. “If the stock price of KakaoBank drops further, Kookmin Bank’s capital will diminish further.”

KakaoBank shares are down about 51% in 2022, more than three times the drop in the Kospi Index. The affiliate of Kakao Corp made its stock market debut just over a year ago, with shares initially surging. But they slumped soon after that, falling about 68% from their peak in August 2021.

The lender went public at a high valuation amid a flurry of IPOs in Seoul last year that led to increased scrutiny by regulators. It was the second-largest IPO in the city in 2021, a year that marked a record US$18 billion tally in proceeds in the country.

KakaoBank was formed in 2016 after the Korean government offered online-banking permits for the first time in 2015. Its users grew quickly as the online bank has benefitted from its parent messenger service. Kakao shares are down about 31% this year. – BLOOMBERG