Right Choice

NCSoft CEO Kim Taek-jin and Netmarble Games Chairman Bang Joon-hyuk.
NCSoft CEO Kim Taek-jin and Netmarble Games Chairman Bang Joon-hyuk.

 

As the corporate value of Netmarble Games, which will carry out an initial public offering (IPO) in May, is estimated at 13 trillion won (US$11.57 billion), NCSoft has a smile of satisfaction. NCSoft is the fourth largest shareholder of Netmarble with a 9.8 percent stake.

According to related industry sources on March 21, NCSoft, the fourth largest shareholder of Netmarble, will be able to secure cashable assets worth up to 1.2 trillion won (US$1.07 billion) as the corporate value of Netmarble, which will be listed on KOSPI in May, is expected to reach 13 trillion won (US$11.57 billion). Considering the fact that the company bought Netmarble shares for 380 billion won (US$338.17 million) in 2015, NCSoft will have over three times higher returns on investment.

When the two companies joined hands in 2015, Nexon bought shares in order to force itself to become part of NCSoft's management. Nexon, the largest shareholder of NCSoft with a 15.1 percent stake, officially announced to participate in the management at that time. So, NCSoft CEO Kim Taek-jin, who had only 10 percent stake in the company, needed help.

Kim chose Netmarble Games Chairman Bang Joon-hyuk. NCSoft and Netmarble exchanged their shares. Based on it, Kim was able to protect his control of the company with a total of 18.9 percent stake – 10 percent in Netmarble and 8.9 percent in Nexon.

At that time, there was a market consensus that the share exchange was a gamble for NCsoft to protect its management because the corporate value of Netmarble assessed by NCSoft was way too high. In fact, NCSoft estimated the corporate value of Netmarble, which posted some 570 billion won (US$507.07 million) in sales as of 2014, at 4 trillion won (US$3.56 billion) and exchanged shares based on it. It was like apparently that the decision was an unreasonable move even considering the growth potential in the future.  

The current corporate value of Netmarble is estimated at 13 trillion won (US$11.57 billion), which is three times higher than two years ago. Kim’s decision is now considered “divine move.” An official in the industry said, “Back then, no one thought that NCSoft and Netmarble were comparable. The partnership between the two companies is now considered the right choice.”

Industry watchers say that the collaboration of the two has led to success in terms of business, beyond stock values. NCSoft transferred the intellectual property right of its PC game Lineage to Netmarble and Netmarble released the mobile version of Lineage. “Lineage 2 Revolution,” a mobile game released by Netmarble in December last year, recorded sales of 7.9 billion won (US$7.03 million) on the first day of release and 206 billion won (US$183.23 million) in a month. Based on the results, Netmarble seeks to globalize role-playing game (RPG), targeting the global market.

NCSoft also fulfilled its long-cherished desire in the mobile game sector. The company has led the domestic gaming market with its computer game Lineage series and Blade & Soul. However, NCSoft failed to make achievement in the mobile game sector, and Netmarble settled the problem.



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