Oasis IPO draws tepid interest from institutional investors

South Korean grocery delivery platform Oasis Corp. saw lukewarm interest from domestic institutional investors during the Feb. 7-8 bookbuilding for its initial public offering. The company, which initially aimed for a market capitalization of more than 1 trillion won ($794.6 million), may have to lower the indicative price range or postpone its listing plan, sources said.

Most of the institutional investors placed bids at prices lower than the indicative range of 30,500-39,500 won. While some put in bids at the upper end of the range, a number of investors bet on around 15,000 won, half the price at the lower end.

Oasis may lower the indicative range to 18,000 won, achieving a market cap of around 570 billion won. The grocery delivery platform initially aimed for a market cap between 970 billion won and 1.25 trillion won.

OVERVALUATION

Investors are rushing to mid- and small cap companies in the local IPO market, analysts said. Oasis hopes to become the first large cap firm to go public in Korea this year, aiming to raise 160 billion-207 billion won via a public offering.

Oasis is overvalued compared with its local rival Kurly Inc., according to IB sources. Kurly, valued at 1 trillion won, has 10 million users and is forecast to post 2 trillion won in 2022 revenue. Oasis serves 1.3 million users and is expected to log 400 billion won in revenue for the same year.

EXIT STRATEGY

The company's largest shareholder's exit plan via the IPO also contributed to weak interest from institutional investors, according to IB sources.

Oasis aimed to sell a total of 5.2 million shares, comprised of 3.6 million new shares and 1.6 million existing shares, owned by local tech service provider and digital marketing firm Gaeasoft. Divestment in 1.6 million shares would amount to 48 billion won, given the lower end of the indicative price range.

Gaeasoft holds a 55.17% stake, followed by local private equity firms Korea Investment Partners and Unison Capital Korea, which own 13.32% and 11.76%, respectively. Other minority stakeholders include Korea Investment & Securities, NH Investment & Securities, Home & Shopping and E-land Retail.

The grocery delivery platform may put off its IPO plan if the offering price per share is set below 20,000 won as some shareholders, who have been acquiring Oasis equities since 2021, would see a loss.  

TEPID DEMAND FOR E-COMMERCE IPOS 

Korean e-commerce companies have seen deteriorating investor sentiment of late in the local market. Kurly, which has suffered increasing operating losses since its inception in 2014, delayed a listing plan last month. Online shopping giants SSG.COM and 11Street have also postponed public offerings.

Oasis posted 356.9 billion won of revenue and 5.7 billion won of operating profit in 2021. For the first three quarters in 2022, the grocery delivery platform achieved 311.8 billion won in revenue and 7.7 billion in operating profit, up 20% and 78% from the same period in 2021, respectively. 

Once it manages to go public, the company is poised to enter the quick commerce and automated transaction segments, as well as expand its early morning delivery services across the country.

Write to Ye-Jin Jun, Jong-Kwan Park and Seok-Cheol Choi at ace@hankyung.com

Jihyun Kim edited this article.