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Market Kurly makes U-turn to Korea Exchange IPO

Kurly shifts into Korean listing, after weighing global and domestic IPO options

By Jul 08, 2021 (Gmt+09:00)

Market Kurly makes U-turn to Korea Exchange IPO

Kurly Inc., the operator of South Korea's online grocery delivery service Market Kurly, has canceled a US listing plan to resume its domestic IPO process.

Eased domestic listing rules and concerns about the unfavorable environment for Asian companies' US public offerings, following Didi Chuxing's IPO last week, led the gourmet food delivery platform to withdraw from a New York listing, according to investment banking sources. 

On Friday, Market Kurly confirmed its decision to go public on the Korea Exchange, instead of seeking a US listing.

"Kurly had explored both overseas and domestic IPO options. After reviewing detailed conditions such as its business model and stock market conditions both at home and abroad, Kurly has decided to go ahead with an initial public offering in the Korean stock market," it said in a statement.  

The announcement comes after China's most popular fitness app Keep pulled out of plans to apply for a US listing last week, with Chinese regulators set to investigate data security concerns at Didi, China's ride-hailing firm, according to the Financial Times report on Thursday. 

Domestic brokerage, in their hurry to win the mandate, estimate the country's leading online food delivery platform at 5 trillion won ($4.4 billion) in enterprise value. That is more than double the $2 billion valuation suggested when it recently drew another $200 million from its existing shareholders including DST Global, Sequoia Capital and Aspex Management, as well as two new investors.

According to the sources, it remains uncertain whether Samsung Securities Co. would be chosen again as Kurly's domestic IPO underwriter.  

Following Coupang Corp.'s $4.6 billion US IPO in March, Kurly had terminated its contract with Samsung Securities to shift towards a US stock market debut. Its cumulative loss of about 300 billion won had spawned concerns about whether the unicorn, or a startup with a valuation of over $1 billion, would be able to fetch a high valuation from a domestic IPO.

Coupang, the country's No. 2 e-commerce platform, had switched to the New York listing, because its accumulated loss of about 5 trillion won disqualified it from a domestic listing. It is now valued at $70 billion on the New York Stock Exchange, nearly six times its 2020 sales.

For Kurly, its 2020 revenue almost doubled to 953 billion won from a year earlier, but its operating loss deepened to 116.2 billion won from the previous year's 98.6 billion won. Alongside heavy initial investments, e-commerce platforms tend to see their losses widening as the number of customers rises.

In the statement, Kurly said its latest $200 million funding round was completed with Millennium Management and CJ Logistics Corp. participating as new investors. New York-based Millennium is one of the world's largest alternative asset management firms. CJ had signed business cooperation in April this year to help Kurly expand its services nationwide.

U-TURN TO KOREAN STOCK MARKET

In March, the Korea Exchange loosened IPO regulations on loss-making companies to stop unicorn startups from seeking an overseas listing. Under the new requirements, companies in the red are now eligible for a domestic IPO as long as their market capitalization exceeds 1 trillion won.

The US IPO environment for Asian companies appears to have taken a turn for the worse. The share price of Didi Chuxing has been sliding since its US stock market debut last week, hit after Chinese regulators tightened rules for companies listed overseas.

A delayed IPO by Singapore-based Grab Holdings Inc. through a merger with a special purpose acquisition company added to the uncertainty over the US stock market listing.

By contrast, South Korea's IPO market is headed for a record volume of offerings. A slew of high-profile IPOs, including banking app KakaoBank, game developer Krafton Inc. and Kakao Pay, are set to debut in the coming months, despite lowering their valuations. In particular, loss-making Kakao Pay is scheduled to go public on the Korea Exchange next month, with its valuation estimated at $10 billion.

Meanwhile, Kurly's domestic rival Oasis Corp., referred to as Oasis Market, has hired NH Investment & Securities Co. and Korea Investment & Securities Co. as its IPO managers.

(Updated with details from the company statement)

Write to Ye-jin Jun at ace@hankyung.com

Yeonhee Kim edited this article.

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