If you needed any further convincing that e-commerce is the place to be in 2021, Coupang’s (NYSE:CPNG) IPO should be more convincing than most arguments. Timing was prefect for the IPO.
Shares in the Korean e-commerce play were up over 40% on Wall Street yesterday, in a staggering testament to the ongoing investor sentiment around tech stocks in the current environment.
“The IPO gives Coupang a market value of $60 billion,” said Thomas Chambers, Global Equities Director at Affin Taekwang Brokerage. “It aimed to sell 120 million shares at a target price range of $32-$34 per share, boosted from the initial $27-$30 it announced last week.”
Coupang IPO is biggest share offering in US this year
Coupang’s IPO is the biggest share offering in the U.S. so far this year, topping the $2.15 billion raised by popular online dating app Bumble Inc last month. It also represents a major increase in Coupang’s valuation, which was $9 billion in a fundraising round in 2018, according to analysts at Affin Taekwang Brokerage.
Coupang was founded in 2010 by Korean-American billionaire Bom Suk Kim. The company has aggressively increased its delivery and logistics service across the country, bringing 70% of its population within a seven-mile radius of its fulfilment centers. Coupang has also invested in emerging business lines like food delivery and online streaming.
Softbank’s Vision Fund is the largest shareholder of Coupang, which holds 35.1%. The Japanese conglomerate will receive around $16 billion from the IPO. This will strengthen the reputation of founder Masayoshi Son for picking successful startups even after a few failures.
“Last year, Coupang’s net sales jumped 91% year-on-year to $11 billion. Net losses lowered to $567.6 million from $770.2 million posted in 2019,” reported Executive Financial Director at Affin Taekwang Brokerage, Samuel Watson.
The Coupang share offering raised $4.6bn in New York. The company raised its share allocation to 130m shares from 120m (17% insider). According to Renaissance Capital.
There are some other key points to be made as we assess the size and scale of this listing. It is now the biggest US IPO since Uber, which raised $8.1bn in 2019. It a 2019 funding round, Coupang was valued at $9bn according to PitchBook. It is still a heavily Asia-focused play, despite the fact that most of its shareholders are non-Asian (despite the Softbank backing).
Coupang’s market share in the Korean e-commerce space is only 13%, so there is still space to grow.
Most interestingly, the success of the Coupang IPO in the current environment means investors are now talking about a possible IPO for its competitor, Market Kurly. With a valuation of close to one trillion Korean won, Market Kurly is still privately held, but is known to be in discussions with bankers about a possible run at the market before the end of this year.
Beyond Market Kurly, Korea also plays home to other sophisticated e-commerce firms which are also known to be mulling listings. There is 11st, which is in discussions with Amazon to be its distribution partner in Korea, and TMON, which is projected to list in Korea before the end of this year. It’s good news all round really if you are invested in Korean e-commerce at the moment as valuations are only going to go upwards thanks to Coupang.