Korea's leading used-car platform Encar drops IPO plan

Encarsales.com Ltd., a South Korean used-car trading platform, will withdraw its initial public offering plan as early as this week due to deteriorating foreign investor sentiment, banking sources said on Tuesday.

The Korean firm has concluded that it is difficult to reach the corporate value it hopes for amid global stock market uncertainty, after discussions with Australian auto trading platform carsales.com Ltd., which wholly owns Encar shares, and IPO managers UBS Group AG and Mirae Asset Securities Co.

Encar and carsales.com targeted a corporate value of 800 billion won-1 trillion won ($617.9 million-$772.3 million) during the IPO procedures, according to sources.

Encar saw it won’t be easy to attract mid-to-long-term foreign investors amid overseas stock market volatility. It also expected that a sharp rise in stock prices after listing on domestic markets won’t continue throughout next year.

The Korean used-car platform will revive the IPO plan after strengthening its business fundamentals to attract foreign institutional investors, sources said. 

“The Korea Exchange has been strictly reviewing Encar’s preliminary IPO filings since September of this year, as the car platform’s local peer K Car Co. saw its stock plunge after the market debut. In general, stock market conditions are unfavorable to platform companies,” said a banking source.  

Encar was established in May 2014 as a spin-off of SK Inc. With 1.2 million autos registered annually for trading, it is one of Korea's largest used-car platforms.

The car platform’s operating profit reached 28.9 billion won in 2022, up 25.7% from 2020. Its revenue amounted to 81 billion won last year, increasing 39.9% % from 2020.

Write to Seok-Cheol Choi at dolsoi@hankyung.com


Jihyun Kim edited this article.