South Korean retail investors scramble for a piece of Kakao Games IPO

The $323m initial public offering of a South Korean gaming company has smashed local records for demand, attracting orders of about 1,500 times the stock available, in a graphic illustration of what one fund manager described as “herd behaviour”.

The IPO of the gaming unit of South Korea’s leading messaging app, Kakao, drew gross bids from retail investors of about Won115tn ($97bn) for about $65m of shares, according to SK Securities. Investors scrapping for allocations from the retail tranche, which represented about one-fifth of the total offering, caused the trading systems at two local brokerages to break down last week.

Kim Mi-seon, a 52-year-old maths teacher from Incheon, was among those left disappointed ahead of Kakao Games’ debut in Seoul on Thursday. She picked up just five shares priced at Won24,000, despite placing bids for Won180m. “It feels like a lottery to me,” she said.

Analysts attributed the fervour among investors such as Ms Kim in part to the blockbuster market debut of SK Biopharmaceuticals in July, as well as the $4bn valuation attached last week to Big Hit Entertainment, the music agency behind K-pop boy band BTS.

Choi Joon-chul, head of VIP Asset Management, a Seoul-based fund, said investors have been “swept up by herd behaviour — just…