Netmarble Rises After Korea's Biggest IPO in Seven Years

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  • Games company founded by high school dropout surpasses LG
  • Stock jumped more than 9 percent before shedding gains

Netmarble Shares Priced at Top-End of Range

Netmarble Games Corp. rose as investors pursuing a high-growth alternative to traditional industry piled into South Korea’s biggest coming-out party in seven years.

Shares in the mobile game developer and publisher ended 3.2 percent higher at 162,000 won in Seoul, after rising as high as 9.2 percent above the initial public offering price. The company now has a market value of about 13.7 trillion won ($12.2 billion), surpassing LG Electronics Inc.

“It wasn’t a cheap stock to buy upon listing, but there’s still room for the company to grow its value as it expands into Japan and China this year,” said Lee Seung-hoon, an analyst at BNK Securities. “The drop in gains appears to have to do with profit-taking by IPO participants.”

Founded in 2000 by high-school dropout Bang Jun-hyuk, Netmarble is a rare entrepreneurial success in a nation dominated by politically connected manufacturing conglomerates. Betting smartphones would drive gaming, Bang built the company into one of Asia’s largest publishers of mobile titles such as Lineage 2 Revolution, and won backing from China’s Tencent Holdings Ltd. A successful debut could inspire a generation of talent in a country whose conglomerates have been accused of stifling innovation.

Bang Jun-hyuk

Photographer: Reed Saxon/AP Photo

The South Korean company raised 2.66 trillion won in the country’s largest listing since 2010, according to data compiled by Bloomberg. Netmarble was priced at more than 70 times 2016 earnings, surpassing NCSoft Corp.’s roughly 29 times and Nexon Co.’s 45 times as of Thursday’s close. It also faces stiffening competition, with NCSoft releasing a role-playing series this year to directly challenge Lineage 2 Revolution.

Still, HMC Investment Securities Co. on Friday recommended buying the stock, expecting the price to rise to as much as 200,000 won this year.

Netmarble’s 48-year-old founder has been compared to late Apple founder Steve Jobs for the way he returned to rescue a company wallowing in losses. Its operating profit surged three-fold from 2014 to 2016. Bang owns 24.5 percent of Netmarble, which at the IPO price conferred upon him a net worth of about $3 billion, according to the Bloomberg Billionaires Index. The founder, Tencent and local conglomerate CJ E&M Corp. are now the three biggest shareholders in the company.

Armed with cash from the IPO, the company wants to capitalize on rising demand for games as smartphone adoption grows outside of its core markets of the U.S., China, South Korea and Japan. It’s embarking on a shopping spree that could amount to as much as 5 trillion won in coming years, Chief Executive Officer Kwon Young-sig told reporters in April.

— With assistance by Yuji Nakamura

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