Investors crowd South Korea’s Big Hit Entertainment, IPO oversubscribed by 1000+ times

On Monday, Big Hit Entertainment, the management label of South Korean hugely popular K-Pop group BTS, priced its initial public offering (IPO) at the top of its range, with buyers hoping to gain from South Korea’s biggest IPO in the last three years.

The IPO, which was over-subscribed by more than 1,000 times, is riding on the success of the seven-member band, which has become the first South Korean group to reach the top spot on the U.S. Billboard Hot 100 singles chart with song “Dynamite”.

In a regulatory filing, Big Hit said it has priced its IPO at $115 (135,000 won) per share, the top of an indicative price range of 105,000-135,000 won it had announced earlier in September.

Nearly 1,420 institutional investors have shown interest in acquiring its shares against 1,117 times the number available, said the filing. Nearly 98% of applicants said they would pay for the top-range price if not more.

Institutional and retail investors’ subscriptions are due on October 5 and 6th.

Through the IPO, BTS aims to raise $820 million (962.6 billion won), in what is South Korea’s biggest IPO since Celltrion Healthcare went public in 2017 wherein it raised 1 trillion won.

The pricing values Big Hit at about 4.8 trillion won, taking into account common shares plus redeemable preferred shares that will be converted into common shares upon the IPO.

With loads of liquidity available in the South Korean market, many analysts opine that the total bid from retail investors could touch $85 billion (100 trillion won) making it South Korea’s hottest initial public offering to date.

South Korea’s central bank is also watching the IPO closely since a massive oversubscription for shares could adversely impact short-term money markets.

Big Hit is expected to list on the KOSPI in October.

Categories: Creativity, Economy & Finance, Entrepreneurship, HR & Organization, Strategy

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