KKR, Anchor buy controlling stake Korea's Ticket Monster

A number of co-investors are also participating in the deal, including Canada Pension Plan Investment Board and Temasek Holdings-owned Pavilion Capital. The consortium will own a 46% stake in Ticket Monster on a fully diluted basis, with Groupon retaining 41% and management holding the balance. Dan Shin, co-founder and CEO of the business, will remain in place.

Groupon, which acquired Ticket Monster for $260 million in January 2014, will receive $285 million in cash from the transaction, with the remainder going to the Korean company. Offering an insight into the decision to sell, Groupon CEO Eric Lefkofsky said that it became clear that Ticket Monster would benefit from additional resources and local expertise as the Korean e-commerce market developed.

A source familiar with the transaction additionally told AVCJ that Groupon recognized the investment required in marketing, new products and service development would have a more significant impact on its financials globally than was anticipated on acquiring the business. This led to the appointment of Deutsche Bank to run a process, but not for a 100% stake in Ticket Monster. Groupon wanted to sell enough to get the company off its books but also participate in the future upside.

Capturing this upside means harnessing a market that is rapidly shifting from offline-to-online retail from PC to mobile platforms. South Korea's e-commerce market has seen compound annual growth of 16% since 2008 and mobile commerce, led by application-based technology, is expected to achieve 40% penetration by 2017, up from 2% in 2011, according to Mirae Asset research.

Ticket Monster is a pioneer in the space, establishing one of Korea's largest online marketplaces that offers discounts on consumer goods, restaurants and entertainment services, and travel. Its mobile app had been downloaded more than nine million times as of December 2014 and approximately 70% of customers now access the platform via mobile devices.

However, the company also faces increasing competition. This comes from traditional retailers entering the online space, established online players such as eBay's Gmarket and Auction sites and SK Group affiliate 11st, and mobile-centric start-ups that have graduated from Groupon-style daily deals to become e-commerce marketplaces.

The latter category, though it accounts for a fraction of Korea's e-commerce landscape, has drawn much interest. Ticket Monster, the pioneer, has been surpassed by Coupang, which claimed it reached the $1 billion in annual gross merchandise value - in 2013 - faster than any other company globally. Last December it received a $300 million funding round led by BlackRock Private Equity Partners. The valuation exceeded Ticket Monster's valuation of $782 million.

The other significant mobile-centric start-up is Wemakeprice, which is still wholly-owned and bankrolled by its founder, Huh Min, who made his fortune in another industry.

"The strong combination of a well-resourced shareholder base and an innovative management team puts Ticket Monster in pole position to lead the market with dynamic, creative services and drive value for consumers," Steve Ko, managing director at KKR, and Sae Wook Wi, a partner at Anchor, said in a joint statement.

KKR's investment is coming from its second pan-Asian fund, which has a corpus of $6 billion. Anchor, a Korea-focused firm set up in 2012 with the spin-out of three senior members from Goldman Sachs' principal investment team in the country, is committing capital from its $500 million debut fund.

The deal is expected to close in the second quarter of 2015, pending regulatory approvals.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

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