Mobility platform Socar slashes price to push ahead with IPO

South Korea’s first mobility unicorn Socar Inc. has cut its IPO price by 18% to push ahead with its stock market debut, according to industry banking sources.

The car-sharing platform decided at a Tuesday board meeting to list its shares at 28,000 won ($21) per share, 18% lower than the bottom end of its price guidance between 34,000 and 45,000 won.

Accordingly, the volume of its shares on offer could be reduced by 20% from the planned 4.45 million shares, ending up raising only 102 billion won. 

During the Aug. 4-5 bookbuilding, a majority of institutional investors offered to buy the shares at less than 30,000 won apiece. The stock was about 80 times oversubscribed.

The IPO price cut will slash its IPO size to 127.4 billion won from its estimate of 154.7 billion to 204.8 billion won.

Based on the IPO price, its enterprise value will be at the mid to high end of the 900 billion won range, down 60% from the upper end of its previously estimated valuation.

The corporate value is below the 1.3 trillion won estimated in March of this year, when it sold some existing shares to Lotte Rental Co.

Back in 2020, Seoul-based Songhyun Investment bought Socar shares during the series-E funding round at a valuation of 1.1 trillion won.

Socar got pushback from investors last month, who argued that Socar set its value too high compared with its global counterparts.

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 due to subdued market demand, despite lowered valuations.

But Socar decided to go ahead with its stock market debut to reduce its debt to equity ratio of 211.42% as of end-March.

Also, the proceeds will be used to fund mergers or acquisitions and venture into new businesses such as electric bicycles and autonomous driving.

Socar has earmarked 44 billion won for 2022 investment and 48 billion won for next year.

The mobility platform will become 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 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.

Write to Seok-Cheol Choi at dolsoi@hankyung.com
Yeonhee Kim edited this article.