Coding Prodigy Behind Hit Game PUBG Eyes IPO Worth Billions

(Bloomberg) -- Kim Chang-han, a former child computer prodigy who won national coding competitions in South Korea in the 1980s, had reached his lowest point.

It was 2014, and he’d just laid off a third of the employees at his gaming startup. Since 2000, he’d created three multiplayer online games at three startups that all fell flat.

“That was the darkest time in my life,” Kim, 46, recalled. The following year, he sold his firm to the company now known as Krafton Inc., which he joined as an executive producer.

Then his fortunes began to change. As a last attempt to succeed in the business, he decided to make what’s known as a battle royale game, an online game where players compete against one another in an ever-shrinking battlefield to be the last person standing. “Every fiber in my being was telling me to make this game,” he said.

Kim persuaded the Irishman Brendan Greene to join the company and move to South Korea as the game’s creative director.

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Bluehole Inc., as Krafton was called at the time, released PlayerUnknown’s Battlegrounds, or PUBG, in 2017. It became one of the most successful games of all time, with the PC and console versions selling more than 70 million copies and the mobile version being downloaded about 600 million times, according to Krafton.

Now the company is planning an initial public offering in mid-to-late 2021 that could be South Korea’s biggest in years. The share sale could raise billions of dollars, Kim, who became Krafton’s chief executive officer last year, said in an interview in Seoul, declining to give further details.

The IPO could value the startup at as much as 30 trillion won ($27.2 billion), according to a Jan. 5 report by Eugene Investment & Securities Co.

South Korea is set to raise as much as $10.9 billion, a record, through more than 120 IPOs this year, according to the brokerage. KakaoBank Corp., the largest internet-only lender, and LG Chem Ltd.’s battery unit are expected to conduct initial share sales in 2021, according to the report. The surge in IPOs comes after South Korea’s benchmark stock index gained 34% in the past 12 months, one of the best performances in the world.

The country’s biggest-ever IPO was the $4.3 billion offering of Samsung Life Insurance Co. in 2010. That was followed by the $2.4 billion listing of Netmarble Corp., a Seoul-based gaming company, in 2017.

Krafton, whose name represents a commitment to craftsmanship, manages four game studios but PUBG accounts for the vast majority of its sales and profits, according to Kim. It had revenue of more than $1.1 billion in the nine months ended September, according to a company filing.

Some people have concerns about whether the company is a “one-hit wonder,” said Han Kim, general partner and co-founder of Altos Ventures Management Inc., which holds shares in Krafton. “I think the more important thing is how the company can utilize the intellectual property of PUBG and how it can make that into an even bigger franchise.”

Krafton’s Kim said the company is creating an animated show that will be uploaded on streaming services and a web cartoon. It will eventually make movies and dramas, he said. The company is open to acquisitions in these areas, Kim said.

Krafton founder Chang Byung-gyu is the largest shareholder with a 17% stake as of Sept. 30, followed by Tencent Holdings Ltd., which owns 16% through a subsidiary, according to a Krafton filing. Kim has 1.5%.

Kim won a personal computer contest organized by South Korea’s science ministry in 1985 when he was 10 and went on to claim several other national coding prizes. He co-founded Ginno Games in 2009 after being involved at two other startups, and was “very frustrated” when its game failed.

But that’s all behind Kim now as Krafton prepares to go public. He said he’s determined to expand the company’s games repertoire beyond its initial success. The company plans to release a new battle royale mobile title this year that will be based on PUBG, another PUBG-related PC and console game by next year and a survival horror game in 2022 that will depict the PUBG universe three centuries into the future.

“We will not stay as a one-hit wonder,” Kim said.