Can U.S. Investors Buy Big Hit Entertainment Stock?

South Korean record label Big Hit Entertainment is gearing up for an IPO. The stock may appeal to investors looking for profitable startups. Big Hit made a profit of 49.7 billion won ($42.4 million) in the first half of 2020, which was strong despite the COVID-19 pandemic impacting live events. 

The Big Hit IPO date is almost around the corner and the company has priced the listing. In a sign of strong demand for the stock, the company has priced the IPO at 135,000 won per share ($115). The price is at the top of the range considering that the company suggested an IPO pricing in the range of 105,000 – 135,000 won. The chosen IPO price values Big Hit at 4.8 trillion won. Big Hit stock is expected to make its public debut on Oct. 15. 

The Big Hit IPO listing is taking place in South Korea. The company is offering 7.13 million shares. With the Big Hit IPO listing expected to raise 962.6 billion won ($820 million), it will be the largest South Korean IPO since 2017. Big Hit stock will trade on the KOSPI exchange.

There's a lot of demand for Big Hit IPO stock. For example, institutional investors have oversubscribed for Big Hit shares by more than 1,000 times. Institutional investors are so keen to own a piece of Big Hit that 98 percent of them say they are willing to pay even more than the IPO price of 135,000 for the stock. 

South Koreans can invest in Big Hit IPO stock through underwriters. Big Hit hired J.P. Morgan, NH Investment & Securities, Korea Investment & Securities, and Mirae Asset Daewoo as its IPO underwriters. First, investors will open an account with any of the underwriters to place their orders for Big Hit stock. However, J.P. Morgan only accepts orders from institutional investors. Institutional and retail investors have until Oct. 6 to submit their bids for Big Hit’s pre-IPO stock.  

U.S. investors will be able to buy Big Hit stock after it debuts on the public market. Foreigners looking to invest in Big Hit stock will need to open a stock trading account with a Korean broker and fund it. 

However, the process may not be as straightforward as buying shares listed on Nasdaq or the NYSE. Foreign investors may be required to satisfy certain Korean regulatory requirements to be able to participate in the local stock market. Therefore, some U.S. investors choose to invest in South Korean stocks through Korean-focused ETFs. You could shop for a Korea-focused ETF with exposure to Big Hit.