Shares of Big Hit Entertainment, the management label of world's most popular South Korean K-Pop group, BTS, were priced at the top end of the range at its initial public offering (IPO) on Monday as investors chased South Korea's largest listing in over three years. Big Hit Entertainment's stock price was set at nearly $115 or 135,000 South Korean won per share, according to a regulatory filing on Monday.
The filing showed that the stock was more than a 1,000 times oversubscribed by institutional investors. The IPO will make Big Hit founder Bang Si-hyuk a billionaire while turning each of the seven band members into multimillionaires.
Biggest IPO in Three Years
Big Hit Entertainment priced shares at 135,000 after setting an initial range of 105,000 to 135,000. It is the biggest South Korean IPO since Celltrion Healthcare raised 1 trillion won in 2017. Big Hit is expected to make its market debut in October. According to the regulatory filing, Big Hit will raise another around $820 million or 962.55 billion Korean won through the offering. The stock was 1,117 times oversubscribed by institutional investors, the filing showed.
The IPO makes the band's founder, the 48-year-old Bang a billionaire now. Bang owns more than 40 percent of the Seoul-based music agency, while gaming company Netmarble Corp. holds 25 percent after investing $172 million in 2018. Retail investors will be able to subscribe for shares early next month.
The IPO saw around 1,420 institutional investors seeking shares in the pre-subscription offers. Around 98 percent of the institutional investors said that they would pay the top-range price or more.
Market on Rally Following IPO
Big Hit reported a $42.4 million or 49.7 billion won profit for the first half of 2020 as its online concert and merchandise sales on the Weverse app offset event cancellations during the COVID-19 pandemic. In fact, an online concert by the band in June was the world's biggest paid online music event ever, attracting more than 750,000 viewers. This has further strengthened its fan base.
Moreover, BTS grossed a whopping $170 million last year, making it the fifth among the world's top concert draws, just behind Elton John, according to trade publication Pollstar. BTS has been one of the major success stories wherein band members, all in their 20s, actively and aggressively make use of social media to open up about their anxieties through social media, which Bang has called a "window into the soul of BTS." This has aided the band by making it more accessible to their fans.
Following Big Hits' IPO pricing, entertainment stocks in South Korea rallied. Shares of YG Entertainment soared nearly 10 percent, JYP Entertainment jumped 8.36 percent, while SM Entertainment gained over 6 percent. Big Hit's IPO was expected to get a strong response given that fans were reportedly looking to secure shares of the label on its growing popularity.