(Bloomberg) – The manga business of South Korean messaging giant Kakao Corp. pushes back its IPO plans on the Tokyo Stock Exchange until next year, aiming for a valuation of $6 billion or more.
Manga app operator Kakao Piccoma Corp. previously scheduled an initial public offering for December, but is delaying the process due to falling tech valuations, according to people familiar with the matter. Piccoma was valued at around 847 billion yen ($6.2 billion) when it raised funds last year, and the company hopes to maintain that threshold when it goes public, one of the people said. . Its IPO will likely take place in the first half of the year, but plans remain flexible and dependent on market prices, the sources said.
Piccoma joins a growing pipeline of companies waiting to go public after a global stock market rout hit tech companies with high multiples. Valuations of e-commerce giant Coupang Inc. – sometimes called South Korea’s Amazon – briefly soared to more than $86 billion last year after a $4.6 billion listing in New York, for plunge more than 60% from this peak. It’s become a cautionary tale for companies ranging from chip architect SoftBank Group Corp. Arm Ltd. to Kakao Entertainment Corp., both of whom are planning to sign up in New York but have yet to decide on a timeline.
Piccoma, whose site features popular Japanese-style comics, can be patient because it’s already making a profit, according to one person. Top managers include Nomura Holdings Inc., the people said.
“It will be difficult to get the same valuation,” said Mitsushige Akino, a senior executive at Ichiyoshi Asset Management Co. Rising global interest rates and inflation will make it difficult to trade stocks with high price-earnings ratios of last year he said. “Markets may recover, but the mechanism for raising valuations has changed.”
Piccoma plans to go public, but IPO details, including timing, continue to be under review, a company representative said, without giving further details.
Owned 72.9% by Kakao and 18.2% by Kakao Entertainment, Piccoma is battling against Line Corp., operator of Japan’s largest messaging platform, to become the country’s most widely used manga app. Piccoma’s monthly readership peaked at 9.5 million in June, up from around 2 million in August 2017. This helped it rank eighth globally among non-gaming apps in terms of monthly sales in June, according to data tracker data.ai.
The app offers the first chapters of most cartoons for free. It charges users who want to continue reading, while also offering the option to wait 24 hours before continuing a given cartoon without paying. The approach struck a chord with readers and helped Piccoma attract new users when trying to break into the Japanese market.
A digital shift in the Japanese comics market also fueled Piccoma’s growth. Digital manga sales increased 20% in 2021 from the previous year, having more than quadrupled in seven years and accounting for more than 60% of the total $5 billion market, according to a report by All Japan Magazine. and Book Publisher’s and Editor’s Association.
Piccoma made a profit for the first time in 2020, based on filings made with Korean regulators. Its net income more than tripled to $39 million in 2021 thanks to an 88% increase in sales. However, the company’s net profit fell to $2 million on a 27% increase in revenue for the first half of this year as higher marketing costs hit profitability.
Piccoma raised 60 billion yen in May last year from investors including Anchor Equity Partners, and the startup hopes its profitability will attract more investors when it goes public, one person said. In presentations to investors, some have compared Piccoma to other companies that generate viewership-based revenue, such as Netflix Inc. Piccoma’s manga app has an advantage because its revenue per user is not capped at Fixed monthly fee, but may increase depending on the number of chapters read, depending on the person. Yet even Netflix’s stock has plunged this year as subscriptions have stagnated.
Piccoma’s debut in Tokyo could also be a watershed moment for a growing number of Korean startups trying to break into overseas.
Operator of South Korea’s largest messaging app, KakaoTalk, parent company Kakao has struggled to break into markets in Asia and elsewhere as the sprawling group has launched headlong into mainstream messaging apps such as WeChat and Line. Piccoma, however, is betting he can use his experience in Japan to expand elsewhere. The manga app launched its service in France last March to create a play for European audiences.
“We plan to secure Piccoma’s place in the French market and lay the foundation for Kakao’s global expansion,” Piccoma said in a statement in July.
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