K Bank, a South Korean neobank that partners with the leading crypto exchange Upbit, is moving towards a $3.7 billion initial public offering (IPO). The bank’s CEO is confident in the success of the IPO, with plans to issue 41 million new shares to raise $265 million in capital. This move is seen as the biggest IPO in the second half of the year, pending a preliminary screening process before listing on the Korea Exchange (KRX). K Bank’s user base grew during the pandemic, attributed to its partnership with Upbit, where users could open platform-linked bank accounts online.
With the aim of using its wide user base as a foundation for its IPO bid, K Bank hopes to complete the process before the end of 2024. The bank has the largest market capitalization and public offering amount among South Korean companies attempting IPOs this year. Established in 2017 as the first neobank in South Korea, K Bank posted a net income of $64 million in the first half of the fiscal year, the highest since its launch. With rapid increases in new users, the bank aims to expand its customer base and profitability through the IPO.
Although K Bank’s performance seems impressive, critics have raised concerns about potential inflation due to the performance of Upbit, the leading virtual asset exchange in South Korea. Rapid increases in short-term housing mortgage loans and fears of a market slump could also pose challenges to the IPO bid. The decline in the price of cryptocurrencies, such as Bitcoin, is another factor that could affect the bid. The case of Kakao Bank, a rival neobank whose share prices slumped despite a successful IPO, serves as a cautionary tale for K Bank.
Experts warn that the success of K Bank’s IPO bid is not guaranteed, as several obstacles could derail the process. The performance of Upbit, potential inflation from short-term loans, and concerns about a market downturn are key factors to consider. Additionally, the volatility of cryptocurrency prices, such as Bitcoin, could impact the IPO bid. The case of Kakao Bank, which faced a similar situation with a successful IPO followed by share price slumps, highlights the risks involved in the neobank sector. K Bank’s success will depend on its ability to navigate these challenges and maintain growth and profitability in the long term.
