Bloomberg
$ 3.6 billion Coupang IPO shows that the US is the king of technology IPOs
(Bloomberg) – The initial public offering by South Korean e-commerce giant Coupang Inc. is in the process of becoming the largest listing by a Korean company in a decade. And, like most major technology offerings today, it is happening in New York. There are three main reasons why the US is the best choice for the electronic retailer backed by Masayoshi Son of SoftBank Group Corp. Perhaps more significantly, New York offers a sizable assessment award. It also has a deeper, more liquid market, and allows for unequal voting rights that would benefit Coupang’s founder Bom Kim, who left Harvard Business School. The US has been the preferred destination for megatechnology IPOs, with the biggest debut of 2020, Airbnb Inc. and DoorDash Inc. both listed in New York. Chinese e-commerce giants like Alibaba Group Holding Ltd. and JD.com Inc. also went public there. Coupang is trying to raise up to $ 3.6 billion in its IPO and could raise a value of more than $ 50 billion. That would make it the biggest float for a Korean company since the Samsung Group opened its home insurance unit in 2010. It had the loss-making e-commerce company listed in Korea – which starting this month will allow unprofitable companies to go public – – Coupang could have gotten a maximum rating of just $ 10 billion, according to Suh YongGu, professor of marketing at Sookmyung University. “The history of capitalism in South Korea is short, so Koreans don’t attribute high valuations to loss-making companies,” said Suh. South Korea’s stock market is less than 70 years old and is dominated by chaebols, or industrial groups controlled by families. In fact, SK Bioscience Co., a unit of the SK Group, one of the largest chaebols in the county, will be the last to have a presence in the stock market when it goes public this month. The maker of AstraZeneca Plc’s Covid-19 vaccine for Korea is trying to raise $ 1.3 billion before it was quoted on March 18, according to the Seoul Economic Daily on Monday. Korean investors’ appetite for their startups led by local entrepreneurs, however, will be tested in the coming months with IPOs from Krafton Inc., the creator of the hit game PUBG, and the country’s largest mobile bank, Kakao Bank. Unlike Coupang, these companies are profitable. Cupang has lost money over the past three years, recording an accumulated deficit of $ 4.12 billion in December, according to its documents. Thanks to the increase in online shopping during the pandemic, however, it managed to nearly double its revenue to $ 12 billion last year. A $ 51 billion valuation would place Coupang among the five most valuable companies in Korea, of which Samsung Electronics Co. is the largest. Other major Korean startups with growing influence in e-commerce – the $ 58 billion Internet conglomerate Naver Corp. and the $ 39 billion messaging app Kakao Corp. – both are listed in Seoul, but were profitable when they went public. Both are supported by entrepreneurs and not tied to chaebols like the Samsung Group. In fact, Coupang’s listing in the United States will allow it to exceed the combined market value of the six chaebol-owned retailers trying to expand their presence in e-commerce – – E-Mart Inc., Lotte Shopping Co., GS Retail Co., Shinsegae Inc., BGF Retail Co. and Hyundai Department Store Co .. Liquidity is another attractive feature of the United States market, allowing companies to raise funds frequently through the secondary share sales. Korea’s stock market, with a total value of $ 2.12 trillion, is a fraction of the US $ 44.2 trillion, according to data from Bloomberg. “It’s easier for investors to get out” of their holdings in the U.S., said Seo Sang-Young, an analyst at Kiwoom Securities in Seoul. “And the volume of business is much higher.” And finally, a listing in the United States gives founders more power. Korea does not allow unequal voting rights, favored by technology companies like Alphabet Inc. and Facebook Inc., which see this 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, as it lacks shareholder protection. Kim, the 42-year-old founder of Coupang, will end up with 76.7% of the company’s voting rights with only 10.2% of its shares outstanding. “We would like Coupang to be listed in Korea,” said Kim Sung-gon, a spokesman on the Korean Stock Exchange. “But we respect the choice of the company.” Korea’s IPO expansion year begins with Coupang FloatStill, missing out on the chance to buy one of the country’s most important companies in the largest Asian company IPO since the $ 25 billion launch of Alibaba Group Holding Ltd. The York listing at 2014 is irritating retail investors who have come to dominate the Korean stock market since the spread of the pandemic. “There is certainly regret among retail investors that they cannot buy on the IPO,” said Kim DongJoo, CEO of Iruda Discretionary Investment, a Seoul-based investment company that serves retail investors looking to buy foreign shares. Largest IPOs of Korean companies: Coupang is proud of its same-day or at least before dawn deliveries. It is also giving its warehouse staff and 15,000 full-time delivery workers a total of $ 90 million in pre-IPO stock, a unique gift that occurs at a time when the death of a series of messengers due to overeating of work due to the increase in online orders is causing a national uproar. “We believe we are the first company in Korea to make our frontline employees shareholders,” said Kim in a letter to shareholders in Coupang’s IPO process. Five workers at the Coupang warehouse died last year, according to the Korean Trade Union Confederation, a major union organization. On Saturday, a Coupang delivery driver was found dead in an incident that Yonhap News said showed symptoms that his colleagues attributed to overwork. Aoupang said in a statement on Monday that the deceased worker “worked about four days a week on average and worked about 40 hours in the past 12 weeks.” He added, however, that he would “make efforts to completely protect health. and worker safety. ”(Updates with Coupang’s statement on the recent death of a worker in the last two paragraphs) For more articles like this, visit us at Bloomberg. comSubscribe now to stay up to date with the business news source more reliable. © 2021 Bloomberg LP