Game developer Krafton, which is best known for its online multiplayer game PlayerUnknown’s Battlegrounds, is expected to soon announce a stock split as it prepares for a closely-watched initial public offering (IPO) on the Seoul exchange.

The South Korean company plans to hold a general meeting this month to ask shareholders to approve a stock split, according to industry sources.

The move is seen as part of preparations for the planned listing. Krafton stock recently traded on K-OTC, the domestic over-the-counter market, at around 1.7 million won ($1,512) per share, more than a four-fold jump from about 400,000 won in April last year. The stock’s rally has continued even after a disappointing reaction to the company’s new game, Elyon, which was launched in December.

Krafton is apparently concerned that having the stock price so high could deter investors from buying its shares in the IPO. Observers expect a split ratio of 1-for-10.

There is also speculation that the company might consider a bonus issue of free additional shares to existing shareholders to depress the share price, as this would have the same effect as a stock split without impacting shareholders’ proportionate ownership of the company. Krafton has a strong equity position to implement a bonus issue, but the option of a stock split is still considered more likely, observers said.

The IPO would be a great exit opportunity for the company’s financial investors, including IMM Investment. The Seoul-based private equity firm first invested in Krafton in 2009, then injected more money in 2014 and 2018. In its latest investment, IMM Investment bought 200 billion won worth of redeemable convertible preferred shares for 650,000 won apiece that have all now been converted to common shares.

“There are concerns about an IPO bubble, but many expect the public market’s appetite for Krafton to increase its valuation in the IPO,” an industry insider said.

Krafton hired Mirae Asset Daewoo to lead the listing process in October, with Credit Suisse, Citigroup Global Markets Korea Securities, JP Morgan and NH Investment & Securities serving as joint bookrunners. The listing is expected as early as this year. (Reporting by Byung-yoon Kim)