K bank, Toss aim to differentiate from KakaoBank in their IPO plans

KakaoBank headquarters in Seongnam, Gyeonggi Province / Newsis

By Anna J. Park

Following KakaoBank's stock price plunge over the past year, K bank and Toss Bank, the country's two other internet-only banks, are focusing on differentiating themselves from KakaoBank in their initial public offering (IPO) strategies.

KakaoBank was the first digital bank to go public last August, meeting success initially. The bank's innovative and accessible platform was evaluated highly, with its market cap once exceeding 40 trillion won ($30.5 billion) in the first few months after its listing on the benchmark KOSPI last year.

But the digital bank's market cap shrank to 14.9 trillion won, as of Wednesday, now that the market's initial overvaluation of the bank has faded. While the stock price has nosedived by half since the start of this year, brokerage firms continue to publish analysis reports, lowering their target prices for the bank further.

Because of KakaoBank's disappointing downward stock movement over the past year, K bank and Toss Bank, which have also been preparing for their own IPOs, are trying to set themselves apart from KakaoBank's case. The two digital banks seem to have realized that a similar IPO strategy to KakaoBank's would not guarantee success for them.

K bank headquarters in central Seoul / Courtesy of K bank

As K bank has officially kicked off its IPO schedule, with submission of a preliminary evaluation request to the Korea Exchange (KRX) at the end of last month ― the first step for the bank's listing on the KOSPI ― the bank plans to emphasize its comfortable service-oriented banking.

It is a different approach from KakaoBank's focus on its IT-based digital platform in its IPO strategy. Rather than stressing the bank's digital platform as a key growth factor, K bank has been highlighting the core competency of its banking services.

The bank's partnership with cryptocurrency exchange Upbit is also expected to be emphasized, as a way to differentiate it from KakaoBank in terms of growth potential. However, it is uncertain whether the bank's plan to distance itself from KakaoBank's case would succeed in the market's evaluation of K bank's future growth.

Given that it usually takes around four months from requesting a preliminary evaluation to going public, K bank is expected to be listed as early as November. K bank was Korea's very first internet-only bank, founded days earlier than KakaoBank in January 2016.

Toss Bank headquarters in Gangnam District, southern Seoul / Newsis

Meanwhile, Toss Bank ― the third digital bank in Korea ― is putting its priority on raising its corporate value to a maximum level, rather than accelerating its IPO plan.

As Toss is a comprehensive financial platform that not only involves banking services but also brokerage as well as other functions, the company seems to be focusing on attracting further investments for now, at a corporate valuation of about 10 trillion won.

It is largely expected that Toss' IPO will come as early as the second half of next year or even later than that.

In the meantime, Toss is planning to brand itself as a total financial platform as well as a global fintech firm, differentiating itself from KakaoBank.

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