Deal focus: Ticket Monster targets seamless service

For all the speed and ease with which Korean e-commerce companies market products, payment processing is a longstanding bottleneck. Prevented by law from retaining credit card information, they must ask customers to enter details afresh for every purchase.

A couple of years ago the bottleneck was eased as certain dedicated payment gateway providers were allowed to retain information. Online gaming provider NHN Entertainment (NHNE) swiftly moved into the space with its mobile platform Payco. This is the context for NHNE's investment and strategic partnership with Ticket Monster, an e-commerce marketplace controlled by KKR and Anchor Equity Partners.

NHNE has committed KRW47.5 billion ($40 million) to Ticket Monster at a valuation of $1.5 billion, in what is likely to be the first tranche of a $300 million round. As part of the arrangement, NHNE will promote Payco on Ticket Monster.

"The way we were addressing it before was by working with numerous credit card companies and seamless payment providers," explains Daniel Shin, CEO of Ticket Monster. "The problem with that is because another company is holding on to the credit card details and each provider has a separate app, the user has to download third-party apps and enter their information. It's quite a hurdle to set up. By working with NHNE we can make the service more integrated into Ticket Monster and prevalent to our users."

When KKR and Anchor acquired a 46% stake in Ticket Monster last year, the company was valued at $782 million. The subsequent increase reflects the nature of the previous transaction - rather than a standard growth round, Groupon was spinning out the business - and the rapid step up in gross merchandise value (GMV). Since the spin-out last April, Ticket Monster has achieved year-on-year GMV growth of 50% in each quarter, with goods worth KRW280 billion sold in the second half of 2015.

Online retail sales in Korea have more than doubled in value over the last five years, reaching KRW53.9 trillion in 2015. Shin expects the market to double in size again by 2019-2020, and Ticket Monster's capital-raising effort is intended to help capture this growth. It intends to tap a broad range of investors, including strategic and financial players. KKR did not comment on whether it would participate in the round.

A large portion of the proceeds have been earmarked for M&A and technology investment, notably to improve customer experience on the delivery side. This is also an area of focus for Ticket Monster rival Coupang, which is investing substantially in its own logistics infrastructure. However, Ticket Monster's strategy is more asset-light than asset-heavy.

"Korea's last-mile infrastructure is among the best in the world," says Shin. "The problem is there is no technology connecting the e-commerce providers and the last-mile delivery providers in a real-time way. We want to find the best last-mile providers in Korea and build a technology platform around them."

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• Topics
• North Asia
• Consumer
• Financials
• Technology
• Expansion
• South Korea
• KKR
• Anchor Equity Partners