Controversial ‘Lion Heart Studio’ listing, Kakao affiliates again… Noisy over duplicate listings

The stock market is noisy over Kakao Games, a game company with a market cap of 5 trillion won. The start is the news that was delivered to the market on April 12. It was stated that ‘Lion Heart Studio’ (hereinafter referred to as ‘Lion Heart’), a subsidiary and developer of the game ‘Odin’, was pursuing an IPO. As soon as the news broke, the stock price of Kakao Games plummeted by nearly 8%. This is attributable to growing concerns about the issue of ‘double counting’ following the listing price of subsidiaries. Double counting refers to a phenomenon in which the value of the parent company’s stock decreases as the subsidiary goes public. On the same day, institutional investors, fearing a decline in value, concentrated on selling Kakao Games shares.

The sharp drop in the stock has fueled the anger of individual investors. Above all, complaints abounded in that it was an attempt to list an affiliate of ‘Kakao’. Kakao, the holding company, said that there is no ‘split listing’ to list subsidiaries, but Kakao Games, an affiliate, is showing a move to list subsidiaries. Investors are looking coldly, saying, “If you said you would not list affiliates, did you mean that you would list subsidiaries of affiliates?”

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