Boy Band BTS Unleashes Hit IPO

Big Hit Entertainment Co., the management company behind South Korean pop sensation BTS, made its market debut Thursday, capitalizing on the global buzz about South Korean pop culture and a local fervor for investing, reports The Wall Street Journal. 

Shares in Big Hit roughly doubled from their initial public offering price by early afternoon in Seoul, lifting the company’s value to the equivalent of about $8.5 billion on a fully diluted basis. For comparison, Warner Music Group Corp. , one of the world’s largest record labels, is worth nearly $15 billion and concert specialist Live Nation Entertainment Inc. about $12 billion.

Investor orders for the IPO hugely exceeded the shares on offer, even though the coronavirus pandemic has upended the global live-music business this year, and despite the fact that Big Hit’s financial fortunes are tightly bound to its star act, the seven-man BTS.

Big Hit is an unusual investment proposition. The IPO prospectus warns that BTS made up nearly 88% of all its revenue in the first half of this year, making the company especially vulnerable should the band fall from favor.

The listing document also highlights how 18 months or more of military service—mandatory for most South Korean men—could “disrupt the cohesion and commercial longevity” of BTS and the other boy bands it manages. Political tensions are another potential headache. Recent remarks by BTS about the Korean War angered some online commenters in China.