Korean Cloud firms draw investors’ interest despite weak IPO market

[Image captured from KT Cloud Youtube]

South Korea’s cloud sector is gaining investors’ attention at a time when the overall stock market sentiment has been hit by high interest rates and demand for initial public offerings have slumped.

According to industry sources on Sunday, KT Cloud and NHN Cloud are planning to raise a combined 1 trillion won ($774 million) in pre-IPOs. The plan comes after Megazone Cloud successfully raised 450 billion won from MBK Partners and IMM PE in September. Megazone Cloud, which provides services such as cloud introduction, design, construction and operation, was valued at about 2.4 trillion won during the financing round.

KT Cloud will go through an open bidding process on Tuesday in hopes to raise up to 800 billion won. KKR, Macquarie, Mirae Asset Global Investments and Digital Bridge Group are among the shortlisted investors in the financing round. New York Stock Exchange-listed Digital Bridge Group operates funds worth 70 trillion won.

NHN Cloud is in negotiations with Mirae Asset Venture Investment and IMM Investment to raise around 200 billion won.

KT Cloud and NHN Cloud want to be valued at 4 trillion won and 1.1 trillion won, respectively, from their pre-IPOs. Sources said that big name investors are mulling investment in the companies as the growth potential of the local cloud market remains high.

Market tracker Korea IDC projected the country’s public cloud service market to grow at an annual average of 14.8 percent as digital transformation (DX) has become a hot topic for many organizations.

U.S.-based Amazon Web Services (AWS) controls more than half of the Korean cloud market, followed by KT Cloud with a market share of about 20 percent. Latecomers such as NHN Cloud and Kakao Enterprise are expanding business capacity.