Mobility platform Socar targets $1.2 bn value for Aug IPO

South Korea’s car-sharing platform Socar Inc. has estimated its corporate value at up to 1.6 trillion won ($1.2 billion) for an initial public offering scheduled for August.

It is poised to become the first Korean mobility service provider to go public, and the second company to list on the main Kospi bourse this year, after LG Energy Solution Ltd. In January, LG Energy, the world's second-largest battery maker, raised 12.8 trillion won in a spectacular IPO.

Socar is seeking to raise up to 205 billion won from the IPO, based on its price guidance of between 34,000 and 45,000 won apiece. It will confirm the IPO price after the July 1-2 bookbuilding.

If the price is set at the bottom of the range, its corporate value will come in at 1.2 trillion won. That is slightly lower than the 1.3 trillion estimated by Lotte Rental Co. last March, when the country's largest car rental company bought a 13.9% stake in the mobility platform.

In view of the declining share prices of mobility companies in other countries, Socar has cut its estimated enterprise value.

Its public offering will come after other IPO candidates, including security service company SK Shieldus Co., homegrown app store operator One Store Co. and Tailim Paper Co. withdrew their IPOs last month due to subdued market demand, despite lowered valuations.

GROWTH POTENTIAL

Socar's valuation represents a 34 to 50% discount from eight times its revenue, based on the average multiple of its 10 counterparts in other countries, including two US-based mobility platforms Uber Technologies and Lyft, as well as Grab Holdings, called Southeast Asia's Uber.

Uber, the world’s largest ride-sharing company, has seen its corporate value plunge by more than 40% to 57 trillion won, compared with the 97 trillion won at the time of its debut on the New York Stock Exchange in May 2019.

Socar's revenue climbed 31% on-year to 289 billion won in 2021, but its operating loss widened by 43% to 21 billion won during the same period.

An investment banker said that Socar’s estimated valuation is still higher than that of global mobility companies. Based on its price guidance, Socar's price-to-sales ratio is around 3.5 times, above the average 2.5 times for global mobility service platforms.

In this regard, Socar needs to demonstrate its growth potential to appeal to investors, he advised.

Socar is the country’s first mobility unicorn, or a private company with a valuation of $1 billion or more. It submitted its IPO application in January of this year.

Mirae Asset Securities Co., Samsung Securities Co. and Yuanta Securities Co. are joint bookrunners for the IPO.

Write to Ye-Jin Jun and Seok-Chul Choi at ace@hankyung.com
Yeonhee Kim edited this article.