SEOUL -- Shares in South Korea's Kakao Pay more than doubled on Seoul's stock market in their trading debut on Wednesday, rising as much as 156% from their initial public offering price on investor enthusiasm for the fintech company's growth potential.
Kakao Pay raised 1.5 trillion won ($1.3 billion) in its IPO last week, offering 17 million new shares. It plans to spend part of the proceeds on launching services such as mobile stock trading and nonlife insurance while expanding its reach in overseas markets. Kakao Pay currently does not offer life insurance services but intends to sell nonlife policies after being listed.
After the market opened, the company's shares hit 230,000 won on the Kospi index, up 155.6% from the IPO price of 90,000 won, but quickly pared gains to trade at 182,000 won in early trading. That put the company's market capitalization at 23.7 trillion won, making it the 14th largest component on the benchmark index.
The listing comes as South Korea's financial regulator tightens its grip on big tech companies, including Kakao Pay's parent Kakao, accusing them of abusing customer data and hurting small businesses.
"The essence of Kakao Pay is a financial platform, so we are growing together with a wide range of financial institutions," CEO Ryu Young-joon said in an online news conference last week. "We plan to raise our market share quickly based on our overwhelming number of users compared to rivals and a wide partner ecosystem as well as technology equipped with convenient and stable services."
Kakao Pay said that its accumulated number of users reached 36.5 million in June, with monthly active users at 20 million. Its financial partners number 127, the most in the country. Monthly active users refer to the number of people who utilize the service per month.
The company twice delayed its market debut as the Financial Supervisory Service raised questions about its IPO price and qualification for brokering insurance services. The regulator turned down the company's applications for the listing in August and September, demanding it correct its registration forms regarding those issues.
Kakao Pay is a unit of internet giant Kakao, which holds a 47.8% stake in the company. Alipay Singapore Holding, an affiliate of China's Ant Group, is the second-largest shareholder with a 39.1% stake.
Analysts say that tech companies are embracing financial services more actively as the spread of COVID boosts demand for them.
"Now that the coronavirus pandemic has pushed everyone to conduct their lives more digitally, the massive increase in the online user base and broad shift to e-commerce will increase the rationale for technology firms to incorporate financial services into their ecosystems," Moody's Investors Service said in a report in September.
"Offering digital financial services is becoming more a necessity than an optional extra, while consumer expectations for the quality of seamless user experiences provided by tech firms have never been higher," Moody's said.