Lionheart, creator behind Kakao Games' hit Odin, finds valuation around $3 bn

[Source: Lionheart Studio Corp.]

South Korea’s Lionheart Studio Corp., Kakao Games Corp.’s prized game developer behind its blockbuster mobile game “Odin: Valhalla Rising”, has gained valuation of around 4 trillion won ($3.1 billion) in the over-the-counter market as it readies to move to the Kosdaq this year.

According to the investment banking (IB) industry on Thursday, an unnamed institutional investor has sold holdings of common shares in the company. The stake of less than 3 percent was entirely bought by a mid-sized investment company.

Although the private transaction cannot be deemed as an official pre-IPO deal, it nevertheless has set the market value of the stock readying IPO within the year.

Lionheart’s enterprise value was estimated at 4 trillion won during the purchase due to the sharp increase in sales of MMORPG Odin: Valhalla Rising since its release in the domestic market in June last year. Value upon listing could nearly double.

Odin: Valhalla Rising was also well received in Taiwan when it was released in March.

Kakao Games posted an operating profit of 42.1 billion won, up 170 percent on year while its revenue stood at 266.3 billion won, surging 105 percent on year during the first quarter.

Lionheart owns the intellectual property (IP) rights to Odin: Valhalla Rising which plays a key role in boosting its earnings.

Lionheart recorded an operating profit of 215.3 billion won and sales of 232.5 billion won last year. The cash flow from operating activities (CFO) amounted to 188.1 billion won.

Kakao Games invested 5 billion won in 2018 to acquire an 8 percent stake in Lionheart and increased its stake in the company to 51.95 by 2021.

Lionheart Studio CEO Kim Jae-young and South Korea's midtier game publisher Wemade Co. are also major shareholders.

Kakao Games appointed Korea Investment & Securities, NH Investment Securities, Goldman Sachs, and JPMorgan to lead the IPO last month.

Kakao Games plans to use the funds raised from the IPO further promote Odin: Valhalla Rising in the global market.

Kakao Games will also invest in creating new games to lessen reliance on Odin: Valhalla Rising. According to analysts, the revenue of Kakao Games during the second quarter is estimated at 370 billion won, with more than half, or 200 billion won coming from Odin: Valhalla Rising.

Shares of Kakao Games were trading up 4.11 percent at 58,300 won as of 11:14 a.m. on Friday.

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