Investors Rush for K-Pop Band BTS Label IPO, Prices Hit Top of Range

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by Bhushan Akolkar · 3 min read
Investors Rush for K-Pop Band BTS Label IPO, Prices Hit Top of Range
Photo: Depositphotos

There’s a mad rush of both retail and institutional investors to get their hands on Big Hit Entertainment IPO which is said to be the largest IPO in South Korea for 2020.

As per the regulatory filing on Monday, September 28, Big Hit Entertainment, the management label for widely popular South Korean K-Pop group BTS, prices its IPO at top of the range. Shares of Big Hit Entertainment were set at 135,000 South Korean won (approx. $115) per piece. Big Hit is likely to make a debut next month in October.

There’s been a mad rush of institutional investors showing interest in over 1000 times the number of shares on offer. K-pop, the seven-member band is the first South Korean group to hit the top spot on the U.S. Billboard Hot 100 singles chart with the song “Dynamite”.

The regulatory filing shows that Big Hit plans to raise 962.55 billion Korean won (approx. $820 million) through the Initial Public Offering. The stock has also seen massive oversubscription from an army of South Korean retail investors, popular as Ants. The filing shows that nearly 1,420 institutional investors have shown interest in the pre-subscription offer.

Out of this, 98% said that they would pay the top price or even more. Analysts have it as one of the country’s hottest listings this year. Park Sung-ho, analyst at Yuanta Securities Korea told Reuters:

“Big Hit is classified as a kind of global export firm. Not only has it proven its ability to use Youtube, social media for smart market infiltration, it has fandom platform Weverse which gives unprecedented clarity and control over its revenue sources for a label, and may grow into a true platform player as outside artists increasingly join.”

Big Hit Entertainment Reports Massive Profits

The COVID-19 pandemic and lockdown had put a complete pause on offline events. However, Bit Hit still managed to pull-off massive profits of 49.7 billion won ($42.4 million) during the first half of 2020. With this IPO, all seven band members will be multi-millionaire stockholders with each of them having 68,385 shares.

Through this IPO, BTS management label, Big Hit Entertainment will offer 7.13 million new shares thereby raising 962.6 billion won. This fundraising will also value Big Hit at 4.8 trillion won considering the common shares as well as the redeemable preferred shares. Furthermore, Reuters suggests that the gross bid from retail investors will hit 100 trillion won ($85 billion).

The central bank of South Korea is watching the developments carefully with the massive oversubscription. After Big Hit’s IPO announcement, entertainment stocks in South Korea also shot up on the indices. Shares of YG Entertainment were higher by 8.36% while that of YG Entertainment were up nearly 10%. Besides, SM Entertainment shares also jumped 6%.

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Bhushan Akolkar

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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