Coupang is rumored to have intentions of acquiring major shares in eBay Korea. Founded in 2010 by Kim Bom, South Korea’s leading e-commerce operator is seeking to increase its total corporate volume before a potential initial public offering (IPO) on the Nasdaq, according to sources on Monday.
South Korean local brokerage, Hana Daetoo Securities, released a report stating that Coupang’s largest stakeholders may buy controlling stakes of eBay Korea, which recently went up for sale to generate more funding from investors.
eBay Inc. has decided to sell 100 percent of its South Korean division, valued at around 5 trillion won ($4.2 billion). On March 3, Korea’s largest online platform company has since been tapping possible buyers.
According to The Korea Times, Park Jong-dae, an analyst from Hana Daetoo Securities, wrote a note to clients stating that Coupang is aiming for the Nasdaq listing in 2021. Park added that in terms of expanding the e-commerce firm’s market share, the industry company expects to increase its corporate size by acquiring major stakes in eBay Korea.
The company, so far, secured 3.6 trillion won ($3 billion) in funding from its Vision Fund and SoftBank.
Even with the concern over the spread of the coronavirus, the situation has helped Coupang in terms of orders. The online retailer saw daily deliveries grow from about 2.2 million per day late last year to 3 million in mid-February. The majority of orders, however, are for low-margin goods such as cheap fresh produce and household items.
Preparing for an IPO?
Typically, institutional investors assess on concrete plans for profit visibility and corporate sustainability. However, if it goes for an IPO in the U.S., Coupang’s unimpressive financial statements could become a “doubled-edge sword.”
Coupang valued at around 10.7 trillion won ($9 billion) back in late 2018 at the time of Vision Fund’s investment decision. Though regulatory filings reported the company’s revenue as of 2018 soar 65 percent to 4.4 trillion won ($3.7 billion), it also reported 1.1 trillion won ($924 million) in operating losses. This means it sells a lot of products, but the products lacked higher prices.
Another local brokerage, SK Securities, stated that if Coupang listed for the U.S. stock market, it would undergo a conventional valuation standard for deficit unicorn companies.
Coupang appointed Kevin Warsh, a former Federal Reserve Governor, and Alberto Fornaro, a former Chief Financial Officer at International Gaming Technology, in moves widely seen by many as laying the groundwork for an upcoming IPO.