Naver mulls acquiring about a 10% stake in Kurly

Naver Corp. is considering taking over a stake in Kurly Inc. to become the largest shareholder in the South Korean dawn delivery service market pioneer, a move expected to boost the information technology giant’s position in the fresh food shopping sector.

According to investment banking industry sources on Friday, Naver is exploring an opportunity to acquire about a 10% stake in Kurly from the latter’s existing shareholders.

The current largest shareholder of the premium grocery platform operator is Hong Kong-based Anchor Equity Partners (Anchor PE) with a 13.49% stake.

If Naver takes over a 10% stake from Anchor PE, it could become Kurly’s largest shareholder, outstripping the 5.69% stake held by Kurly founder and Chief Executive Officer Sophie Kim.

With the Kurly holdings, Naver is expected to reinforce its fresh food shopping business, industry observers said.

SHOPPING AS A NEW GROWTH DRIVER

E-commerce has emerged as a key growth driver for the Korean tech giant in recent years. Of Naver’s total revenue of 10.74 trillion won ($7.5 billion) in 2024, 2.92 trillion won, or 27.2%, came from its commerce business.  

But it lags behind its crosstown rivals in the fresh produce shopping business.  

Founded in 2014, Kurly garnered market attention with its early-morning delivery service under the Market Kurly brand, which delivers fresh food to customers’ doors by 7 a.m. if customers order before 11 p.m. the previous day.

The platform, now called Kurly, is considered the trailblazer in Korea’s dawn delivery service market, which has enabled consumers to receive fresh food, eggs and dairy products a few hours before breakfast without having to visit brick-and-mortar grocery stores.

Despite its market sensation, the once-unicorn startup has remained in the red largely due to continued mass investment in facilities like fulfillment and logistics centers, as well as aggressive promotional campaigns amid fierce market competition.

It reported a consolidated operating loss of 18.3 billion won in 2024, narrowed from 143.6 billion won the year prior.

However, it swung to a profit of 13.7 billion won in earnings before interest, taxes, depreciation, and amortization (EBITDA), recording the first yearly profit since its inception.  

RIGHT TIME TO BUY STAKES AT A LOW VALUATION  

In recent years, Kurly’s valuation has been slashed due to its delayed initial public offering on top of its slower-than-expected growth.

In 2022, Kurly got the preliminary nod from the Korea Exchange for its IPO but put off its listing in January 2023 after its valuation nosedived amid a languid stock market.

It has been looking to re-attempt the listing since early last year.

When it raised 120 billion won in pre-IPO funding from Anchor PE and Aspex Management Ltd. in 2023, its enterprise value was estimated at 2.9 trillion won, down sharply from its peak valuation of up to 4 trillion won when it raised 250 billion won in 2021.

Last Thursday, Kurly announced a tender offer to buy back up to 1 million company shares at 15,000 won each in the over-the-counter market.

Based on that price, Kurly’s valuation is estimated at 633.5 billion won.

Its lowered valuation is deemed cheap enough to draw interest from Naver in buying the online grocer’s stake, said industry experts.

If Naver acquires Kurly’s stake, the two companies are expected to seek to collaborate in the online grocery segment.

Naver’s fresh food shopping business could gain momentum on the anticipated synergy from its cooperation with Kurly.

Write to Jong-Kwan Park at pjk@hankyung.com

Sookyung Seo edited this article.