BigHit IPO Makes CEO Bang Si-hyuk A Billionaire, Company Market Value At $4 Billion

BTS members— Jin, RM, Suga, J-Hope, Jimin, V and Jungkook— have an $8-million stake each in BigHit with their 68,385 shares.
BTSs perform on ABC's 'Good Morning America' show in Central Park in New York City, U.S., May 15, 2019.
BTSs perform on ABC's 'Good Morning America' show in Central Park in New York City, U.S., May 15, 2019.

The initial public offering of Big Hit Entertainment, the management label of hugely popular K-Pop group BTS, is giving the company a market value of about $4 billion, Bloomberg reported on Monday, as it took just hours for the company’s underwriters to find buyers for the available stock.

Big Hit priced its initial public offering (IPO) at the top of its range and institutional investors expressed interest in more than 1,000 times the number of shares on offer, Reuters reported.

Big Hit is riding on the success of the BTS, which became the K-pop group to reach No.1 on the U.S. Billboard Hot 100 singles chart last month with song ‘Dynamite’.

The music superstars on Monday announced the release of their new album ‘BE’ slated for November 20. This album involves all members of the group not just in music, but also in the album’s concept, composition and design.

Bloomberg Billionaires Index’s said the IPO has made Big Hit founder Bang Si-hyuk worth $1.4 billion while BTS members— Jin, RM, Suga, J-Hope, Jimin, V and Jungkook— get an $8-million stake each with their 68,385 shares.

An army of retail investors, known in South Korea as Ants, are clamouring to buy stock, while die-hard BTS fans are bidding in hopes of securing even one share in what analysts expect to the country’ hottest listing this year.

Big Hit priced the IPO at 135,000 won ($115) per share, it said in a regulatory filing, the top of an indicative price range of 105,000-135,000 won announced earlier this month.

Some 1,420 institutional investors sought shares in pre-subscription offers, looking for 1,117 times the number available, the filing said. About 98% said they would pay the top-range price or more.

“Big Hit is classified as a kind of global export firm,” said Park Sung-ho, analyst at Yuanta Securities Korea.

“Not only has it proven its ability to use Youtube, social media for smart market infiltration, it has fandom platform Weverse which gives unprecedented clarity and control over its revenue sources for a label, and may grow into a true platform player as outside artists increasingly join.”

Big Hit reported a 49.7 billion won ($42.4 million) profit for the first half of 2020 as its online concert and merchandise sales on the Weverse app more than offset event cancellations during the COVID-19 pandemic.

The firm will raise 962.6 billion won ($820 million) through the offer of 7.13 million new shares, the biggest South Korean IPO since Celltrion Healthcare raised 1 trillion won in 2017.

The pricing values Big Hit at about 4.8 trillion won, taking into account common shares plus redeemable preferred shares that will be converted into common shares upon the IPO.

With plenty of liquidity in the market, some analysts predict gross bids from retail investors could hit 100 trillion won ($85 billion).

The central bank is watching the offer closely as a massive oversubscription for shares could send ripples through short-term money markets.

Institutional and retail investors’ subscriptions are due on Oct. 5-6 and Big Hit is expected to list on the KOSPI on Oct. 15.

Meanwhile, BTS will appear on The Tonight Show Starring Jimmy Fallon for a weeklong special this week ahead of their online concert ‘BTS Map of the Soul ON:E’ scheduled for October 10 and 11.

(With Reuters inputs)