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UPDATE 2-South Korea’s shares in Kakao Bank soar on market debut

* Kakao Bank rises up to 74% above the IPO price

* Kakao Bank is the first Korean digital bank to be listed

* Chat app operator Kakao Corp holds 27.3% of the shares (Adds analyst comment, rating)

By Joyce Lee and Heekyong Yang

SEOUL, Aug 6 (Reuters) – South Korean Kakao Bank Corp is up 38% above its initial public offering (IPO) price on its market debut, amid growth expectations for the digital bank’s planned mobile mortgage business and other offerings.

The listing is the largest in the country since the IPO of the game company Netmarble grossed 2.7 trillion won in 2017.

The digital bank began trading on Friday at 53,700 won per share compared to its IPO price of 39,000 won and rose as much as 74% above its IPO price shortly thereafter. This is compared to an increase in the KOSPI benchmark index of 0.1%.

The largest shareholder is Kakao Corp, operator of South Korea’s dominant chat app, with 27.3% of the shares.

Kakao Bank, South Korea’s first digital bank to go public, opened in 2019 in less than two years and has 13.35 million monthly active users (MAUs), it said last month.

The opening price valued Kakao Bank at 25.5 trillion won, which made it the 16th largest share in the KOSPI based on Thursday’s closing valuation. In Friday morning trading, it climbed to the eleventh highest value on the KOSPI, excluding preferred shares.

Analysts said its high valuation, which overtook the market capitalizations of established banking groups like KB Financial Group and Shinhan Financial Group on Friday, could not be explained by traditional bank valuation metrics.

“The price / earnings ratio of Kakao Bank based on the IPO price is a multiple of 56, while that of the existing bank shares is roughly a multiple of five. It has the rating of another industry, ”said Kim Eun-gab. Analyst at IBK Investment & Securities. (Reporting by Joyce Lee, Jihoon Lee and Heekyong Yang; Editing by Christopher Cushing and Sonali Paul)

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