The South Korean music label behind K-pop sensation BTS has filed for a preliminary review for an initial public offering, according to the nation’s stock market operator Korea Exchange (KRX) on Friday.
Founded in 2005 by music producer Bang Si-hyuk, Big Hit Entertainment houses BTS and other K-pop singers and bands, including Lee Hyun and Tomorrow X Together.
Bang, who serves as the entertainment firm’s chairman, currently holds 45.1 percent stake, while mobile gaming firm Netmarble owns 25.1 percent. The company, estimated its market value to reach up to 5 trillion won ($4 billion), having earned 587.2 billion won in revenue last year. Its operating profit, which stood at 98.7 billion, surpassed the combined operating income of the so-called ‘Big 3’ music labels in Korea – SM Entertainment, JYP Entertainment, and YG Entertainment. The three companies earned a total of some 85.9 billion won in operating income last year.
NH Investment & Securities, Korea Investment & Securities and JP Morgan will lead the offering as the main underwriters while Mirae Asset Daewoo will serve as a joint underwriter.
KRX is expected to complete the review process in 45 days. IPO applicants have to file for the offering in six months upon passing the review process. In theory, Big Hit will be able to go public this year.
Despite high expectations for the IPO, there are some growing concerns as well over Big Hit’s seemingly excessive market value and the impact of the ongoing coronavirus crisis.
“Since the BTS members have not finished the compulsory military service in Korea, the entertainment firm could lose growth momentum down the road because of the conscription,” a market watcher said.
BTS’s world tour concerts scheduled for this year have been mostly delayed or called off due to the worldwide coronavirus outbreak, which as a result has been undermining Big Hit’s profits.
To avoid risks stemming from its heavy reliance on the septet, Big Hit has been diversifying its businesses, while nurturing new K-pop bands. It recently acquired music label Source Music Pledis Entertainment.
By Kim Young-won (email@example.com