YG, third entertainment agency to be listed on KOSDAQ,
attracts 3.6 trillion won in IPO


The recent success of YG Entertainment and other listed Korean entertainment agencies in the stock market is an indicator of the growing influence of Korean pop music at home and abroad, analysts said Wednesday.

YG Entertainment drew more than 3 trillion won in its initial public offering this week, receiving bids for 561 times the number of shares allocated to individual investors.

The company, which produced popular boy group Big Bang and four-member girl group 2NE1, priced its shares at 34,000 won ($33) each, meaning it could raise 42.4 billion won based on the 1.25 million shares it plans to sell. The company plans to list its shares on Nov. 23.

Although the recent scandal involving the use of marijuana by G-Dragon, the popular leader of Big Bang, had been a concern, investors apparently had faith in the overall stability of the firm’s earnings as it prepares to do more business overseas, analysts say.

YG Entertainment lowered the indicative range for its IPO in October after G-Dragon tested positive for marijuana use.

YG Entertainment is the last among the country’s top three entertainment companies to be listed on the stock market following SM Entertainment and JYP Entertainment.

Shares of bigger rival SM Entertainment have nearly tripled in value this year, while the broader market saw a loss of 4.3 percent, as Girls Generation and other popular boy bands saw success in countries such as Japan. 

Founded by Yang Hyun-suk, YG Entertainment’s performers have been sweeping the charts at home and abroad with the total views of all YG-related videos on Youtube hitting more than 400 million. Yang is currently the biggest shareholder of the company with a 47.4 percent stake.

The company said the proceeds from the IPO would be used in discovering and training more rookie musicians by setting up overseas branches in Southeast Asian countries such as Thailand and Singapore.

Along with Big Bang and 2NE1, YG also has Se7en, Psy, Gummy, Tablo and many other star musicians who enjoy strong popularity at home. With these musicians, the company is considered a “blue chip” with sales last year hitting 44.8 billion won, and a net profit of 10 billion won.

YG Entertainment also boasts a clean record in its contracts with musicians, unlike its rivals SM and JYP, which have been mired in contract disputes in recent years.

Recently, all five members of Big Bang and solo artist Se7en extended their contracts for another five years without raising any issues, showing their faith in YG founder Yang, who was formerly a member of a popular band himself in the 90s.

By Shin Hae-in  (hayney@heraldcorp.com)