Listing of BTS label attracts $50B from retail investors

SEOUL, Oct. 13 (UPI) -- K-pop sensation BTS's label, Big Hit Entertainment, is set for an initial public offering on Thursday.

Four Korean brokerage houses, which manage the IPO, said individual investors have deposited $50.15 billion to buy the Big Hit share -- which is just shy of the record $50.27 billion recorded for Kakao Games last month.

This means that those who offered $100,000 will get only three shares of the K-pop agency, which set 1.42 million shares for retail investors with an offering price of $116 per share.

As securities firms come up with target prices between $140 and $325, Big Hit's stock price is expected to surge on its IPO on Thursday, when the Seoul-based label plans to issue 7.13 million new stocks.

"The IPO price fails to reflect the value of Big Hit. It is highly undervalued," Hana Financial analyst Lee Ki-hoon said.

Big Hit's annual sales almost doubled in 2019 to $504 million from a year ago, yielding an operating profit of $85 million -- a 24 percent increase year-on-year.

Despite the relatively small size, the IPO has drawn attention thanks to the global popularity of BTS. The seven-member idol group became the first South Korean act to top Billboard's Hot 100 singles chart with its song "Dynamite."

Some analysts are concerned about Big Hit's high dependence on BTS.

In a recent report, Hanwha Investment and Securities noted that BTS accounted for 97 percent of Big Hit's sales last year.

Meritz Securities analyst Lee Hyo-jin is concerned that group will not be able to keep expanding its fandom.

"For investors, the biggest attraction of Big Hit is BTS. The growth of its fan base, which is the most significant contributor to Big Hit's profit, appears to be hitting the saturation mark," Lee said.