SEOUL -- Kakao Bank shares soared Friday in their debut on South Korea's benchmark stock exchange, rising almost 80% and making the upstart digital lender the country's most valuable listed financial company.
Kakao Bank had 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 index on Tuesday.
The stock opened up 37.7% from its initial public offering price of 39,000 won per share and closed the trading day at 69,800 won, marking a total gain of 79%. The bank vaulted into the top place among financial companies on the exchange by market value at 33.2 trillion won, blasting past traditional lenders including KB Financial Group and Shinhan Financial Group.
The performance also means it ranks as the Kospi's 12th-largest component.
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.
South Korea's biggest digital 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.
However, some analysts say that investors need to wait and see whether the digital banking stock can maintain its price level.
"It is not cheap," said a senior analyst at a foreign securities company, asking not to be named. "I know there are some reasons supporting its price, but we'd better wait and see how things will unfold at this moment."
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.