Korea's Coupang gains 41% on debut after $4.5b US IPO

Coupang represents the largest US offering by a foreign company since Alibaba Group raised $25 billion in 2014. It is also the second-biggest IPO by any private equity-backed Asian company in the past three years – after Kuaishou Technology raised $5.4 billion in Hong Kong last month – and comfortably the largest on record by a Korean PE-backed business.

Coupang sold 130 million shares for $35 apiece, having upsized an offering that was supposed to comprise 120 million shares priced at $32-34, according to a filing. The stock opened at $63.50 on March 11 before falling back to close at $49.25. This gives the company a market capitalization of approximately more than $75 billion. Coupang was valued at $9 billion in its last full private round.

The offering comprised 30 million existing shares, of which 26.7 million were sold by BlackRock. The investor roughly halved its stake and now holds 1.5% of the class A and class B shares combined. The largest investor is SoftBank Vision Fund with 33.1%, while Greenoaks Capital Management, Maverick Capital, and Rose Park Advisors own 16.6%, 6.4%, and 5.1%, respectively.

Coupang secured approximately $3.5 billion in private funding since its inception in 2010. Other backers include Altos Ventures, Sequoia Capital, and Wellington Management. Vision Fund alone accounts for $3 billion of the total, having contributed $1 billion in 2015 and $2 billion in 2018.

Bom Kim, the company’s CEO and chairman, holds a 33.9% interest and a majority voting stake by virtue of the dual-class share structure.

Coupang is a dominant player in Korea’s e-commerce space alongside rival marketplaces Tmon, backed by KKR and Anchor Equity Partners, and Wemakeprice, which counts IMM Investment among its investors. Several traditional retailers – notably Shinsegae – are also pushing into e-commerce. Last month, Tmon raised KRW305 billion ($276 million) in pre-IPO funding.

Coupang reached $1 billion in annual gross merchandise value (GMV) in 2013 – faster than any other company globally - and it reportedly surpassed $10 billion in 2019. Revenue came to $11.9 billion in 2020, up from $6.3 billion in 2019 and $3.8 billion in 2018. At the same time, net losses narrowed to $474.6 million in 2020, from $699 million and $1.1 billion in 2019 and 2018, respectively.

In addition to developing its mobile apps, Coupang has invested heavily in end-to-end fulfillment, best exemplified by its Rocket Delivery service. The company promises next day or faster free delivery for nearly 100% of orders, with some users able to place orders as late as midnight and receive the goods before 7 a.m. the following day.

As of December 2020, Coupang claimed to have built the largest B2C logistics footprint of any e-commerce player in Korea, with over 100 fulfillment and logistics centers – encompassing over 25 million square feet – across 30 cities. It also has the country’s largest directly employed delivery fleet comprising more than 15,000 full-time drivers.

Innovations in recent years include Rocket WOW, a membership program that offers unlimited free shipping with no minimum spend for a flat monthly fee; Rocket Fresh, a fresh grocery delivery business; and Coupang Eats, which the company claims to be Korea’s largest online food delivery platform.

Approximately 70% of Koreans live within seven miles of a Coupang logistics center – underlining the power of online-to-offline solutions in a Korean market that is relatively concentrated in geographical terms and has a higher smart phone penetration than any other country in the world. Nevertheless, Coupang notes that it accounts for a small portion of a rapidly growing area.

Total spending on retail, grocery, consumer food services, and travel was $470 billion in 2019 and is expected to hit $534 billion in 2024. Over the same period, e-commerce spending is projected to rise from $128 billion to $206 billion. E-commerce spending per capita will reach $4,300, up from $2,600.

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• Topics
• North Asia
• IPO
• Technology
• Consumer
• South Korea
• BlackRock
• Sequoia Capital
• Softbank
• Altos Ventures
• Greenoaks Capital
• Wellington Management