Investors press play on K-pop as shares in BTS backer soar in Seoul

Big Hit Entertainment's £634m float is the largest in South Korea for three years

BTS
BTS appear on the Tonight Show with Jimmy Fallon earlier this month

Shares in the company behind K-pop sensation BTS soared on their debut in Seoul on Thursday, making the boy band's seven members into multi-millionaires.

Big Hit Entertainment, which makes almost all of its revenue from the pop sensation, opened at 270,000 won (£182) after being priced at 135,000 won a share and rose as much as 30pc before closing at 258,000 won.

That valued Big Hit at 8.7 trillion won, more than the other three major K-pop management firms combined.

The £634m offering was South Korea’s largest in three years. The firm has thrived despite coronavirus forcing it to cancel live concerts, and investors piled in to the float on BTS’s continued popularity from online performances and hits such as Dynamite, its first English language release.

The pop meant Big Hit founder Bang Si-hyuk is now worth £2.2bn. He also shared his stake with BTS members, giving each almost 70,000 shares worth more than £11.6m.

Investors have reaped large gains from Korean listings recently, especially from companies benefiting from the flood of easy money during Covid.

Big Hit’s offering was more than 1,000 times oversubscribed by institutional investors and more than 600 times by retail. This year, with the surge in trading as the virus kept people home, individual investors have taken over from institutional ones to account for the bulk of Korea's stock market volume.

BTS performs during the Times Square New Year's Eve celebrations last December

The other two large Korean floats this year - Kakao Games last month and SK Biopharmaceuticals, part of chaebol SK Group in July - were also heavily oversubscribed. 

While BTS has been the key to Big Hit’s success, it’s also the company’s major risk, with the band accounting for almost 90pc of its sales in the first half of the year.

The ages of its members are a growing concern as Korea requires its male citizens between 18 and 28 to serve in the military for two years. BTS’s oldest star, Kim Seok-jin, is already 27. 

Another risk is that 30pc of the institutional investors that bought into the IPO can sell shares after a month. For SK Biopharmaceuticals, its three-month lock-up led to a 10pc plunge.

But K-pop companies have generally held up well and the coronavirus crisis has proved that the industry’s global influence remains undaunted thanks to online concerts and album sales.

Shares of Big Hit rivals YG Entertainment and JYP Entertainment are both up more than 40pc this year and their founders' stakes are now worth millions of dollars. YG is behind Blackpink, who featured in a recent Netflix documentary.

Even with Covid making physical concerts impossible, BTS sales have kept rising. An online concert last weekend on Big Hit’s mobile platform for fans drew close to 1m viewers, according to reports.