This article was posted on the ChosunBiz MoneyMove (MM) site at 5:28 p.m. on Nov. 4, 2025.
Smilegate RPG, developer of the game Lost Ark, revealed that its corporate value plunged from 17 trillion won to about 7 trillion won in one year while it continues a lawsuit over roughly 100 billion won in damages with investors.
This could strengthen the argument that Smilegate RPG had no choice but to delay its listing, drawing attention to the court's ruling, because the investors claim Smilegate RPG failed to fulfill its listing obligation and caused them significant losses.
According to the investment banking industry, NH Investment & Securities presented an appropriate corporate value of about 17 trillion won for Smilegate RPG during the process of selecting the company's IPO lead manager in 2022. It was selected that year as Smilegate RPG's lead manager for the IPO.
However, the following year NH Investment & Securities lowered Smilegate RPG's appropriate market capitalization to about 7 trillion won during the IPO initiation process. In less than a year, its value fell by as much as 10 trillion won.
Securities firms often present higher corporate values than the market to be selected as IPO lead managers. Even considering that, some industry insiders say the decision to cut the valuation by 10 trillion won the next year suggests the securities firm judged there were objective reasons to reduce the company's value.
Legal circles say this fact could affect the ongoing damages suit between Smilegate RPG and Rhinos Asset Management.(Related article☞ https://biz.chosun.com/stock/stock_general/2024/01/26/JAA7UIS3DRFJPCOMUCVBMMTCGA/ [Exclusive] Smilegate RPG sued by Rhinos Asset Management for 100 billion won in damages… "They invested 20 billion won, so they should have pursued an IPO")
Earlier, Smilegate RPG faced a 100 billion won damages lawsuit from Mirae Asset Securities in Nov. 2023 for not listing within a specified period. Mirae Asset Securities is the legal plaintiff, but the substantive plaintiff is Rhinos Asset Management, which invested 20 billion won on Dec. 20, 2017 in the form of convertible bonds (CB).
The sides are fighting because they interpret the contract's "listing conditions" in opposite ways. The parties agreed to pursue an IPO if net income for the fiscal year immediately before the CB maturity (Dec. 20, 2023) was 12 billion won or more.
Plaintiff Rhinos alleges Smilegate RPG met the conditions but did not list, causing at least 100 billion won in losses. After issuing the CB, Smilegate RPG rode a growth path thanks to Lost Ark's success. In 2017, when it received the CB investment, the company had a loss of 27.3 billion won, but in 2022 operating profit reached 364.1 billion won.
Rhinos demanded that Smilegate RPG pursue an IPO, judging that the contractual conditions had been met. Smilegate RPG also replaced its lead manager from Mirae Asset Securities to NH Investment & Securities and began preparing for the IPO.
However, on closer inspection Smilegate RPG's position was that it did not meet the conditions to pursue an IPO. Despite operating profits in the hundreds of billions of won, it reported a net loss of 142.6 billion won. This was because a derivative product (CB) valuation loss of 535.7 billion won arose due to the increase in corporate value and was reflected as a net loss.
This dilemma arose because CBs are recognized as liabilities under International Financial Reporting Standards (IFRS). Although operating profit was in the hundreds of billions of won, the CBs caused a net loss, preventing the company from meeting the condition "if net income is 12 billion won or more, pursue an IPO." Korea has applied Korea-International Financial Reporting Standards (K-IFRS) to all listed companies since 2011, and companies preparing for listing generally also follow K-IFRS.
In 2019 Smilegate RPG exercised a call option to repay 30% of the 20 billion won and the remainder remained as CBs. The fair value of that portion was only 19 billion won as of the end of 2022, but when converted to shares its value approached 535.7 billion won.
In this situation, the sharp decline in Smilegate RPG's corporate value in one year could be grounds to argue that it was difficult to pursue an IPO at that time.
In 2023, amid global rate hikes, reduced market liquidity and a downturn in stock markets, so-called "unicorns" (unlisted companies with valuations of 1 trillion won or more) were cancelling IPO plans one after another. Kurly, once eyed at a corporate value of 6 trillion to 8 trillion won, saw its over-the-counter valuation fall to 800 billion won at the end of 2023, and platform companies expected to be worth trillions such as Oasis, 11Street and SSG.com repeatedly shelved IPO plans.
Smilegate RPG judged that in such market conditions it was better to wait for the situation to improve rather than force an IPO at a sharply fallen valuation.
Meanwhile, Smilegate RPG and Rhinos will face off at the fourth hearing on Jan. of next year. The most recent hearing was on Oct. 23.