KKR, Anchor Equity tipped to exit from TMON in 7 yrs

KKR & Co. and Anchor Equity Partners have tentatively agreed to sell their majority stake in South Korea’s e-commerce player TMON Inc. to a Southeast Asia-based rival platform, according to people familiar with the matter on Thursday.

A consortium of the two private equity firms will likely trade their 81.74% stake in TMON for new shares in Qoo10 Pte. Ltd., or its international delivery service company Qxpress. The size of the deal was not disclosed yet. 

In addition to receiving shares in either Qoo10 or Qxpress, both KKR and Anchor Equity may take cash from Qoo10 to cover the shortfall, the sources said. The Singapore-based platform's 2020 revenue came in at 150 billion won.

They will finalize the agreement sooner rather than later, after discussing it with TMON’s No. 2 shareholder comprised of Korean PE firms, the sources said.

The deal would pave the way for KKR and Anchor’s exit from the loss-making Korean platform in seven years. Both PE firms had bought a majority stake in TMON from another online platform Coupang Inc. in 2015 and increased their ownership since then.

At the time of their purchase of TMON, its enterprise value stood at 860 billion won. That compared with its asset value of 178 billion won as of end-2021.

DELAYED IPO

Back in 2019, the KKR-led consortium came close to selling TMON to the retail giant Lotte Group for 1 trillion won. But their negotiations faltered.

Last year, TMON’s plans for an initial public offering were indefinitely postponed, further delaying their divestment.

The deal comes as Qoo10 is preparing for a Nasdaq listing, which is now under review by the US Securities and Exchange Commission. 

The Singapore-based paltform was established in 2010 as a joint venture between eBay Inc. and Koo Young-bae, the founder of Gmarket, a popular South Korean e-commerce player.

Seoul-based Crescendo Equity Partners is a major shareholder in Qoo10 after it invested 60 billion won ($45 million) in the latter in 2019.

BACK TO KOREA

Founded in 2010, TMON had drawn attention in its early business years with a low-price marketing strategy.

Like many other first-generation e-commerce players, however, it was unable to compete against newcomers, which lured shoppers with a diverse selection of goods.

TMON’s operating loss widened to 76 billion won in 2021, compared with 64 billion won in shortfalls the previous year. Sales declined almost 20% to 129 billion won during the same period.

For Qoo10, the acquisition of TMON would give it a foothold in South Korea. The Southeast Asian platform is also said to be in talks to buy the shopping operation of Interpark Corp., another first-generation platform Interpark Corp., in a share swap deal.

Qoo10 founder Koo had worked at Interpark, and launched Gmarket as its in-house venture.

Interpark, once referred to as the Amazon.com of Korea, was sold to Yanolja, a Korean leisure platform, in 2021. Since the purchase, Yanjolja has put its non-travel businesses up for sale.

The TMON deal may herald Koo's return to his home market in about 15 years as well.

After selling Gmarket to eBay Korea in 2008, its founder Koo moved to Singapore and launched Qoo10. Under the agreement with eBay, he was barred from engaging in the e-commerce business in South Korea for the next 10 years.

Write to Chae-Yeon Kim, Jun-Ho Cha and Si-Eun Park at Why29@hankyung.com
Yeonhee Kim edited this article