KakaoBank continues slide as lockup period ends
Under a lockup agreement with underwriters set during the initial public offering process, institutional investors agreed not to sell their holdings for a set period of time in exchange for more shares. The agreement is intended at preventing heavy selling of shares after listing.
Monday was the day the one-month lockup period expired for some shareholders of KakaoBank. This added some 3,141,600 shares, or 8.72 percent of the 36 million shares that were initially allotted to institutional investors, for trading in the stock market. Compared to the total number of KakaoBank shares, the amount is roughly 0.66 percent.
Extra shares offered for trading weighed on the stock's price and pushed it below the 80,000 won mark for the first time since Aug. 13.
After listing on the stock market on Aug. 6 at 53,700 won, KakaoBank stock had gradually strengthened to over 92,000 won by mid-August. However, the price is falling back down, especially from this month on selling by institutional investors.
On Sept. 1, Korea Post sold a 2.9 percent stake in KakaoBank in an aftermarket block deal. The postal service provider garnered around 1 trillion won with the sale of 13.7 million shares at around 80,000 won per share. The sale immediately exerted negative pressure on the internet bank's shares.
On Sept. 2, the bank's shares plunged by 7.77 percent from 88,800 won to close at 81,900 won. The following day, the shares further weakened by another 1.34 percent.
While the bank is already struggling with a batch of locked-up shares released in the stock market, there are more hurdles to come.
When the three-month lockup period for some 5 million shares and six month lockup period for another 13 million shares — both much larger batches than the one released Monday — expire, there could be a larger impact on the share price.
Investors have laid mixed views on the bank's future.
Shinhan Financial Investment had the most optimistic view, setting its target price at 101,000 won in a "buy" position report last month.
"KakaoBank has taken the lead in experimenting with new financial services, with the focus placed solely on consumer needs and wants," said Kim Su-hyun, an analyst from Shinhan Financial Investment.
Goldman Sachs, however, released a "neutral" position report at the end of last month, with a target price of 94,000 won, saying that while the bank has great growth prospects, most of the expectations have already been reflected in the bank's price.
Among other brokerages, Kyobo Securities set its target price at 45,000 won last month.
It's not only KakaoBank that has been hit by the release of locked-up shares.
Other recent IPO companies are due to experience the same glut of shares later this month.
The one-month lockup period for 966,400 shares of Krafton, 16.9 percent of the total shares allotted to institutional investors, will end on Sept. 10. That amounts to 1.97 percent of all Krafton shares.
The six-month lockup period for 3,948,100 shares of SK Bioscience, 31.28 percent of the total shares allotted to institutional investors, will end on Sept. 18. That is 5.16 percent of total common shares of the biopharmaceutical company.
BY KIM JEE-HEE [firstname.lastname@example.org]