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South Korea’s first music copyright sharing platform Musicow is planning to seek a valuation of more than 1 trillion won ($848 million) in its planned initial public offering (IPO) next year.

Musicow is expected to begin its IPO process in earnest, seeking to be valued at more than 1 trillion won, following its pre-IPO, industry sources said on Thursday.

The company has recently hired Mirae Asset Securities as its lead underwriter. It is expected to file for its preliminary IPO review next year. Given that Musicow is still a loss-making company, it is expected to utilize the nation’s special listing system, which has lowered the entry barrier for promising startups.

To be eligible for listing shares on the Kosdaq under the Special Technology Assessment Track, a company has to have at least 50 billion won in market capitalization, at least 3 billion won in sales, and at least 20% average growth rate for sales over the latest two business years.

Musicow's cumulative transaction value amounted to 110 billion won this year through June, up nearly six times from a year ago. The number of investors using its platform surged to 500,470 as of the end of June from 3,000 when it was launched in 2018. Its app recorded 540,000 downloads in just 10 months since its launch in August 2020.

Established in 2016, Musicow is a music copyright sharing platform that allows users to buy a fractional ownership of song copyrights under agreement by the original creators through auctions. Investors receive royalties for the portion of copyrights.

The average royalty rate of return compared to the purchase price of a song copyright on Musicow was 8.7% during the past three years.

Musicow’s new business model has attracted several investors over the past three years, raising about 32 billion won from Korea Development Bank, Hana Financial Investment, and LB Investment.

“Musicow is currently raising funds in a pre-IPO fundraising and its valuation is expected to reach 1 trillion won within this year,” said an industry source. “It is still operating in the red, but will to file for its preliminary review early next year under the special listing system.” (Reporting by Chan-mi Oh)