Coupang Shows US Is Most Lucrative Market For Tech IPOs : Bloomberg

South Korean e-commerce major Coupang Inc.’s (NYSE: CPNG) IPO is slated to be the largest listing by a Korean company in a decade, Bloomberg reports. 

What Happened: New York continues to remain in favor of the Korean e-tailer IPO backed by SoftBank Group Corp’s (OTC: SFTBF) (OTC: SFTBY) Masayoshi Son due to the substantial valuation premium, market liquidity, and uneven voting rights in favor of Coupang’s founder, Harvard Business School drop-out, Bom Kim.

The U.S. continues to attract mega tech IPOs including 2020’s biggest debuts Airbnb Inc (NASDAQ: ABNB) and DoorDash Inc (NYSE: DASH), to Chinese e-commerce juggernauts, including Alibaba Group Holding Ltd (NYSE: BABA) and JD.Com Inc (NASDAQ: JD).

Coupang intends to raise up to $3.6 billion in its IPO and could garner a valuation of over $50 billion, rendering it as the largest float by a Korean company since Samsung Group took its insurance unit public at home in 2010.

Why It Matters: A loss-making company like Coupang would have fetched a maximum valuation of just $10 billion had it got listed in Korea, Bloomberg quoted Sookmyung University professor Suh YongGu. The country will allow loss-making companies to go public from this month. Korea does not assign high valuations to loss-making companies due to its recent tryst with capitalism added YongGu.

South Korea’s stock market is less than 70 years old and is dominated by family-controlled industrial groups. Korea’s SK Group unit SK Bioscience Co. will be the latest to have a stock market presence when it goes public this month. The maker of AstraZeneca’s (NASDAQ: AZN) COVID-19 vaccine for Korea is planning to fetch $1.3 billion ahead of its March 18 listing.

Korean investors’ appetite for their homegrown entrepreneur-led start-ups will be tested in coming months with IPOs by Krafton Inc, the creator of hit game PUBG, and the leading mobile-only bank Kakao Bank, both of them being profitable firms.

Coupang lost money in the last three years, recording an accrued deficit of $4.12 billion as of December. However, it succeeded in almost doubling its revenue to $12 billion in 2020 following the pandemic-led surge in online shopping.

A $51 billion valuation would place Coupang amidst the five most valuable Korean companies led by Samsung Electronics Co Ltd (OTC: SSNLF). Korea’s other big start-ups with growing e-commerce clout, including the $58 billion Internet conglomerate Naver Corp and the $39 billion messaging apps Kakao Corp, were listed in Seoul. However, both were profitable during their IPOs and backed by entrepreneurs instead of family-controlled industrial groups like Samsung Group.

Coupang’s U.S. listing will enable it to exceed the combined market value of the six family-controlled industrial groups-owned retailers attempting to expand their presence in e-commerce, including E-Mart Inc., Lotte Shopping Co., GS Retail Co., Shinsegae Inc., BGF Retail Co., and Hyundai Department Store Co.

Kim, Coupang’s 42-year-old founder, will enjoy 76.7% of the company’s voting rights with just 10.2% of its outstanding shares.

The Korea Stock Exchange has also endorsed the company’s choice.

However, retail investors regret the opportunity to invest in the IPO as per a Seoul-based investment firm CEO Kim DongJoo.

Coupang specializes in same-day or at least pre-dawn deliveries. It is also offering its warehouse staff and 15,000 full-time delivery workers $90 million in pre-IPO stock, a unique bounty at a time when deaths of a string of couriers from surging online orders have led to a national pandemonium.

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