Ticket Monster tools up for e-commerce fight

Gmarket was integrated with Auction, which was acquired by eBay in 2001 for $120 million. Euromonitor International put the combined market share of these sites at 22% in 2013. Since the Gmarket acquisition, online retail sales in Korea have grown 2.5-fold, reaching an estimated KRW45.3 trillion last year.

But it is also a changing market. Consumers are increasingly making purchases via mobile devices at the expense of desktop and other platforms. This was a factor in Groupon's decision to sell a controlling stake in e-commerce marketplace Ticket Monster barely 15 months after buying it for $260 million.

Groupon CEO Eric Lefkofsky said Ticket Monster "would benefit from additional resources and local expertise in its drive to be the leading social commerce company in Korea." This will be provided by KKR and Anchor Equity Partners, which are taking a 46% stake in the business for $360 million. Canada Pension Plan Investment Board and Pavilion Capital are co-investors. Groupon will receive $285 million and retain 41%, with management holding the rest.

Competition in the mobile age comes from not only eBay but also traditional retailers looking to go digital and mobile-centric start-ups that have graduated from Groupon-style daily deals to become e-commerce marketplaces. The latter category is led by Coupang, ahead of Ticket Monster and Wemakeprice.

At least 70% of Ticket Monster and Coupang's users access services via mobile devices and both companies surpassed KRW1 trillion in gross merchandise value in 2013. KKR and Anchor's investment values Ticket Monster at $782 million. When BlackRock Private Equity Partners led a $300 million funding round for a minority stake in Coupang last December the valuation was said to be in excess of $2 billion - a substantial premium for the segment leader.

As to what the new investors can do to help Ticket Monster close the gap, a starting point will be the large amount of data the company has collected on its 11 million users. This will guide reviews of sales and marketing, merchant engagement, and the introduction of new products and services. For example, Ticket Monster recently introduced a payment function that means goods can be purchased on the platform without having to enter credit card information multiple times.

"Ticket Monster is seeing significant growth in a market with huge tailwinds," says a source close to the deal. "The opportunity is there but the question is how do they accelerate their efforts in certain areas, and to what extent can the investors be helpful in this process."

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• Topics
• Technology
• Consumer
• North Asia
• Buyouts
• South Korea
• buyout
• Consumer
• TMT
• KKR
• Anchor Equity Partners