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IPOs

Coupang applies for IPO on New York Stock Exchange

By Feb 14, 2021 (Gmt+09:00)

Source: Coupang
Source: Coupang

Coupang Corp., 37% owned by SoftBank Group, is set to become the first Korean company to list directly on the New York Stock Exchange, with its valuation estimated to have soared 10 times since SoftBank's first investment in the South Korean e-commerce giant in 2015.

The online retailer filed its IPO application to the US Securities and Exchange Commission on Feb. 12. The prospective IPO, which is expected to value Coupang at around $50 billion, would mark the largest listing for a non-US company since the Chinese retailer Alibaba Group’s 2014 debut.

Coupang did not disclose the number of shares it is offering in the IPO, nor its price range.

Initially, Coupang had opted to list on the Nasdaq and received preliminary approval for the Nasdaq listing last month. The company expected an overseas listing to give it a higher valuation than the domestic bourse, which has no listed e-commerce-focused company.

On the New York Stock Exchange, where global e-commerce giants such as Amazon.com and Alibaba are traded, Coupang stands to benefit from the red-hot IPO market. Its offering could take place as soon as March, according to the Wall Street Journal.

Coupang, founded in 2010, has been pushing for its 2021 IPO to take full advantage of the surge in sales last year, as one of the main beneficiaries of the online shopping boom in the prolonged pandemic era.

It is the only Korean e-commerce firm that offers nationwide, same-day delivery, based on its direct delivery system and logistics centers built across the country. In 2020, its sales leapt by 91% to $12 billion won from a year earlier; while its operating loss narrowed to $475 million versus the previous year’s $699 million, according to its IPO filing.

Back in 2015, SoftBank Chief Executive Masayoshi Son invested $1 billion in Coupang, valuing the company at $5 billion. In 2018, SoftBank Vision Fund invested $2 billion in the Korean company, valuing it at $9 billion. Earlier this year, Coupang was valued at $30 billion, according to analysts.

Founder and Chief Executive Kim Bom-suk will be able to exercise 29 votes per share, unlike other shareholders entitled to one vote per share. That means Kim will continue to hold management rights over Coupang, despite details about his ownership not being disclosed. 

INTENDED LOSSES

Despite double-digit revenue growth, the company has remained in shortfall territory, which its senior officials called “intended losses" as its operating profit margin improved. Its accumulated losses reached $4.12 billion as of the end of last year.

The number of its active users, or those who have purchased something through Coupang, came to 14.8 million as of the end of 2020, up 26% year on year, with paid subscribers for quicker delivery service accounting for 32%.

Revenue per person soared by 59% to 283,000 won ($256) on a year-on-year basis in the fourth quarter of last year.

Source: Coupang documents filed with the US Securities and Exchange Commission on Feb. 12
Source: Coupang documents filed with the US Securities and Exchange Commission on Feb. 12

Coupang’s accumulated algorithm for fast delivery is seen as the most attractive factor in luring investors. It offers dawn and same-day delivery services, dubbed Rocket delivery, for items ranging from fresh groceries to school supplies. It also expanded into the food delivery market with the Coupang Eats brand.

The IPO is expected to provide another boost to Coupang, keen to ramp up last-mile delivery infrastructure and technology.

Last year, Coupang announced a plan to build seven fulfillment centers outside of the Seoul metropolitan area for a combined $870 million. It recently hired Tuan Pham, the former chief technology officer at US-based ride-hailing platform Uber, as its new CTO.


BUSINESS DIVERSIFICATION

Analysts say the company may mark a turnaround this year with an estimated revenue of 15 trillion won and an operating profit of 300 billion won.

Further, the company is expected to diversify into various e-commerce services, following in the footsteps of Amazom, in an aim to get customers asking: “How did I ever live without Coupang?”

In December 2020, Coupang said it was launching a subscription-based video streaming service, Coupang Play, in a bid to broaden its services from parcel and food delivery, digital payments and online shopping to original video content services.

Meanwhile, CEO Kim recently announced a plan to give out around 100 billion won worth of shares in the company to its frontline employees, including delivery workers and logistics center employees, on the occasion of the US listing. 

Goldman Sachs is the lead manager of the IPO.

Write to Dong-Hui Park at donghuip@hankyung.com

Yeonhee Kim edited this article.

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