Delivery app Yogiyo draws bids from retailers, PEFs

South Korea’s second-largest food delivery app Yogiyo has drawn about 10 preliminary bidders, including retailer Shinsegae and private equity firms MBK Partners, Affinity Equity Partners, Bain Capital and Permira, by the May 4 deadline.

The country's largest travel platform Yanolja joined the race for 100% of unlisted Yogiyo, estimated at around 2 trillion won ($1.8 billion). It expects the delivery platform to create synergy with its existing travel services, according to investment banking sources.

Before submitting the non-binding bids, about 10 prospective bidders, including the country's three major Korean retailers -- Lotte, Shinsegae and GS -- and PEFs including Affinity Equity Partners, CVC, Permira and TPG, had received information memoranda on Yogiyo.

German food delivery service Delivery Hero SE has put Yogiyo on the market in compliance with the conditions put forward by the Korea Fair Trade Commission last year to close its $4.3 billion purchase of Yogiyo's bigger rival, Baedal Minjok (Baemin).

The price tag for Yogiyo could be sharply lowered from the estimated 2 trillion won, given the seller's urgency to divest of the platform within the year.   

"The selling side must complete the sale of Yogiyo. Under such circumstances, the buyers are highly likely to lower their bids," said another investment banking source."

"Coupang's aggressive investments in Coupang Eats make it difficult for the bidders to raise the price tag of Yogiyo, as well," he added.

Coupang Eats, ranked third in the country's food delivery market, is expected to  step up challenge to bigger rivals armed with a heavy war chest, after its parent Coupang Corp. had made a spectacular $4.6 billion won initial public offering on the New York Stock Exchange in March this year, 

Baemin commands 66% of the food delivery service market in South Korea, followed by Yogiyo with 17.9% and Coupang Eats with 13.6%, according to the Global Bigdata Research, a Korean data provider. In the three wealthiest districts in Seoul, however, Coupang Eats' market share is as high as 45%.

The sell-side was said to have no intention to sell Yogiyo to companies like Coupang, Kakao Corp. and Naver Corp. that could emerge as industry competitors.

PEFs are now tapping strategic buyers such as Lotte and Shinsegae to team up to buy Yogiyo, according to the sources.

Morgan Stanley is handling the sale of Yogiyo.

Write to Ji-Hye Min and Jun-ho Cha at spop@hankyung.com
Yeonhee Kim edited this article.