Deal focus: Food app targets Thailand’s first internet IPO

In Young Chung (pictured), the CFO of Thai restaurant delivery app Line Man Wongnai, has never held such a role before, but he’s been entrusted by one of the region’s foremost internet empires to lead Thailand’s first-ever IPO for a digital business model.

“It’s a healthy pressure,” Chung said. “To be fair, there’s no CFO in this country who has done a tech IPO before. Everyone is new to it.”

Chung started his career as a tech analyst for Macquarie Group and Goldman Sachs before joining Japanese tech giant Line, where he started making VC investments regionally in 2018. His portfolio included Line Man, a delivery app incubated by Line Thailand, and Wongnai, a local restaurant review platform. In hindsight, the merger seemed inevitable.

By 2016, Wongnai had begun raising significant VC funding with plans for a modest IPO. When Chung joined the board following Line’s investment, he advocated a grander vision. That came into focus in mid-2020, when BRV Capital invested USD 110m in Line Man to support its combination with Wongnai and subsequent expansion as an enlarged entity.

Line appointed Chung as Line Man Wongnai’s CFO in September 2020. The following year, the company joined Thailand’s first crop of quasi-unicorns alongside courier service Flash Express, e-wallet platform Ascend Money, and crypto exchange Bitkub. In May 2021, the Stock Exchange of Thailand dutifully eased regulations that prevented listings by pre-profit companies.

Line Man Wongnai raised a USD 265m round featuring GIC at a valuation of USD 1bn last month, claiming to be the largest start-up in Thailand and setting its sights on a domestic IPO. Line and BRV re-upped with support from a VC arm of Bangkok Bank, Taiwan Mobile, and Oil & Retail Business, a Thailand-listed industrial conglomerate with significant lifestyle interests.

“The biggest hurdle and opportunity is that you have to pave the path yourself,” Chung said of the IPO plan, adding that timing could be a matter of years given recent volatility in capital markets.

“That means talking to the right stakeholders, especially regulators. You need to educate the local investor base because there’s no precedent for comparable tech stocks on the index. It’s all challenging, but it’s exciting because once you get it right, you are influential and you can open the door for others, which is quite rewarding.”

The capital will be used to improve technology, expand the user base, and build out the team. More than 450m tech professionals are expected to be added within the year. The user base currently encompasses 50,000 merchants and, tangentially, Line’s 49m local messaging customers.

The ubiquity of Line as texting tool in Thai society is Line Man Wongnai’s key advantage versus competitors such as Grab, Foodpanda, and ShopeeFood. Its second core asset is the Wongnai data base, said to be the largest of its kind locally with some 1m restaurants, 700,000 of which are within the current delivery service footprint.

At the same time, Line Man Wongnai’s status as the only major homegrown operator in this space is said to deliver a distinct edge in locally customised marketing and promotions. Delivery volumes have increased 15x since the onset of the pandemic, with the company claiming it has dominated competitors in terms of leveraging the government’s “Half-Half” consumption stimulus program.

“Many companies say that quarter-on-quarter, growth into the second and third quarter this year has been tough because the market is cooling down overall,” Chung added. “Despite that, we’re growing – although at a slower pace than before – which means we’re gaining market share.”

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• Topics
• Southeast Asia
• Expansion
• IPO
• Technology
• Consumer
• Thailand
• TMT
• Growth capital
• BRV Capital
• GIC Private