Bloomberg
Coupang’s $ 3.6 billion exchange offers US king for technical IPOs
(Bloomberg) – The initial public offering of South Korean e-commerce giant Coupang Inc. is on track to be the largest listing by a Korean company in a decade. And like most major technology offerings these days, it’s happening in New York. There are three major reasons that explain why the US is a better choice for the e-tailer supported by Masayoshi Son of SoftBank Group Corp. Most importantly, New York offers a significant valuation premium. It also has a deeper, more liquid market and allows for unequal voting rights that will benefit Coupang founder Harvard Business School Bom Kim. The US was the preferred destination for mega-tech stockbrokers, with 2020’s biggest debut Airbnb Inc. and DoorDash Inc. listed in New York. Chinese e-commerce giants like Alibaba Group Holding Ltd. and JD.com Inc. also became known there. Coupang aims to raise up to $ 3.6 billion in its IPO and could earn a value of more than $ 50 billion. This will make it the biggest driving force behind a Korean company since Samsung Group launched its insurance unit in 2010. Listed the loss-making e-commerce company in Korea – which will enable unprofitable companies to go public this month – – according to Suh YongGu, a marketing professor at Sookmyung University, Coupang would have a maximum valuation of just $ 10 billion could achieve. ‘The history of capitalism in South Korea is short, so Koreans do not attribute high valuations to loss-making businesses, Suh. South Korea’s stock market is less than 70 years old and is dominated by chaebols, or family-owned industrial groups. SK Bioscience Co., a unit of SK Group, one of the largest chaebols in the country, will in fact be the latest to present a stock market when it is announced this month. The maker of AstraZeneca Plc’s Covid-19 vaccine for Korea, according to Korean-language Seoul Economic Daily, wants to raise $ 1.3 billion on Monday ahead of the March 18 listing, but Korean investors’ appetite for their home-based businesses is leading months tested with IPOs by Krafton Inc., the creator of the hit game PUBG, and the country’s largest mobile bank, Kakao Bank. Unlike Coupang, the businesses are profitable. Coupang has lost money over the past three years and recorded an accumulated deficit of $ 4.12 billion. Thanks to the increase in online shopping during the pandemic, he managed to nearly double his revenue last year to $ 12 billion. A $ 51 billion valuation will place Coupang among the five most valuable companies in Korea, of which Samsung Electronics Co. biggest. Korea’s other big business with growing influence in e-commerce – the internet conglomerate $ 58 billion Naver Corp. and the $ 39 billion Kakao Corp. messaging program – both listed in Seoul, but both were profitable when they went public. The two are backed by entrepreneurs and not linked to the chaebols like Samsung Group. In fact, Coupang’s listing in the US will make it possible to exceed the combined market value of the six retailers in Chaebol trying to expand their e-commerce presence – – E-Mart Inc., Lotte Shopping Co., GS Retail Co., Shinsegae Inc., BGF Retail Co. and Hyundai Department Store Co. .. Liquidity is another allure of the US market, which enables companies to raise funds regularly through secondary share sales. According to Bloomberg, the Korean stock market is a fraction of the US dollar, with a total value of $ 2.12 trillion, according to Bloomberg data. “It’s easier for investors to leave their stake in the US,” said Seo Sang-Young, an analyst. at Kiwoom Securities in Seoul. “And the trading volume is much larger.” And finally, an American listing gives founders more power. Korea does not allow unequal voting rights, preferred by technology companies such as Alphabet Inc. and Facebook Inc., which sees it as a way for founders to focus on the long term. But the US does, even if the ownership structure itself is not without controversy, because it does not have protection against shareholders. Kim, the 42-year-old founder of Coupang, will end up with 76.7% of the company’s voting rights with just 10.2% of his outstanding shares. “We would have liked Coupang to list in Korea,” said Kim Sung-gon, a spokeswoman. on the Korean Stock Exchange. “But we respect the choice of the company.” Korea IPO Boom Year begins with Coupang FloatStill, which misses the chance to buy one of the country’s hottest companies in the largest Asian IPO since Alibaba Group Holding Ltd. ‘s $ 25 billion new The 2014 listing ranked the small investors that Korea’s stock market has spread since the pandemic. “There is definitely a regret among retail investors that they cannot buy in the stock market,” said Kim DongJoo, CEO of Iruda Discretionary Investment, an investment firm in Seoul that trades in retail investors looking to buy foreign shares. Biggest IPOs by Korean companies: Coupang is proud of its delivery on the same day or at least before dawn. It gives its warehouse staff and 15,000 full-time delivery workers a total of $ 90 million in stock before the IPO, a unique magnitude that comes at a time when the death of a string of couriers due to overtime as online orders skyrocketed “We believe we are the first company in Korea to make our frontline employees shareholders,” Kim said in a letter to shareholders in Coupang’s IPO filing. Five Korean warehouse workers have died in the past year, according to the Korean Confederation of Trade Unions, a major labor organization. A Coupang delivery manager was found dead on Saturday in an incident that, according to Yonhap News, showed symptoms attributing to his colleagues overwork. Coupang said in a statement on Monday that the deceased ‘worked on average about four days a week and worked around 40. the last 12 weeks. However, it added that it would ‘make efforts to thoroughly protect the health and safety of workers’ (updates with Coupang’s statement on the recent death of a worker in the last two paragraphs). Visit us at Bloomberg for more articles like this. comSign in now to stay ahead of the most trusted business news source. © 2021 Bloomberg LP