SEOUL -- Kakao Bank shares surged Friday in their debut on South Korea's benchmark stock exchange as the country's biggest digital lender challenges traditional financial service companies.
Kakao Bank raised 2.6 trillion won ($2.3 billion) in its IPO, offering 65 million shares and making it the second-largest stock flotation so far this year. Krafton, a game developer, raised 4.3 trillion won in its IPO earlier this week and will be listed on the Kospi on Tuesday.
Shares opened up 37.7% from its initial public offering price of 39,000 won per share. That vaulted the bank into top place among financial companies on the Kospi index by market value, at 30.2 trillion won.
They continued to go higher, trading at 68,000 won per share within the first 30 minutes of trading.
Kakao Bank's debut comes as South Korea sees its hottest IPO market on record, with analysts expecting at least 20 trillion won to be raised in 2021, or about four times more than last year. Recent interest from retail investors in IPOs has fanned growth of the market, a role traditionally played by institutional investors.
The online bank is taking on established rivals by offering quick and easy financial services through its mobile app. Kakao Bank had 16.2 million customers as of March. The app is the most popular one in the finance industry, with 13.4 million monthly active users.
Analysts say South Korea's incumbent banks face mounting competition as Kakao Bank moves into multiple loan segments.
"It [Kakao Bank] had lower costs than most local bank peers in 2020, [due to] advances in technology and operating without physical branches," Ok Tae-jong, a senior analyst at Moody's, said in a report last month. "Competition will ramp up as Kakao Bank expands its loan portfolio and capital base."
Ok said the virtual bank plans to offer mortgages and merchant loan products, which will expand its addressable market to 65% of South Korea's won-denominated loans over the next 12 to 18 months, compared with just 14% now.
Regarding Kakao Bank's post-IPO plans, CEO Yun Ho-young said last month that his company will consider moving into overseas markets, with Asia being the likely first destination. He said that could be done through capital investments or joint ventures with fintech partners.
Kakao Bank is an affiliate of Kakao, the country's second-largest internet company, best-known for its chat app, KakaoTalk.