Market jitters dampen appetite for e-commerce IPOs

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After Coupang’s successful stock market debut last year, expectations had risen for upcoming listings from popular e-commerce platforms in the country like SSG.com and Market Kurly until early this year.

But the uncertainties surrounding Russia’s invasion of Ukraine and its economic impact are prompting companies to put their IPO plans on hold.

SSG.com, the digital shopping platform owned by retail giant Shinsegae Group, is one of the hottest market launches expected this year.

With an estimated market capitalization of 10 trillion won ($8.1 billion), SSG.com is very likely to seek a merger with eBay Korea, which Shinsegae acquired for 3.4 trillion won last year.

Their combined trading volume is expected to climb to some 25 trillion won, posing a direct threat to market leader Naver.

But the company is still weighing the timing of its long-awaited IPO in a bear market hit hard by the current geopolitical turmoil.

“There is no need to speed up the IPO process when the financial market is shaken by rate hikes and the Russian-Ukrainian crisis. We can wait for a better time to go public,” an SSG.com official said.

Online grocery delivery platform Market Kurly, whose valuation is expected to reach 4-5 trillion won, had planned to debut on the stock exchange by June. But speculation is growing after he failed to submit a regulatory application by the February 28 deadline.

“After losing Coupang to the US stock market, the Korea Stock Exchange introduced new regulations to allow fast-growing unicorn companies with over 1 trillion won in enterprise value – like Market Kurly – to be listed on the main Kospi exchange,” said an industry source who wished to remain anonymous.

“But the stock market has become very volatile since the end of last year, so the operator of the stock exchange appears to have required the company to present more detailed plans to reduce its operating loss.”

Since its launch in 2015, Market Kurly’s cumulative operating loss is estimated at around 270 billion won in 2020.

A Market Kurly official declined to comment on the delayed IPO, citing market uncertainties.

Oasis, a fast-growing grocery platform with an estimated market value of 1,000,000,000,000 billion won, is no different.

“Our goal is to be listed on the stock exchange by the end of this year, but given the market situation, this could be postponed until next year,” an Oasis official said. “We will wait to see how Market Kurly’s IPO goes.”

But experts say the “time” may have passed for e-commerce platforms to receive a high market valuation like Coupang.

“For an IPO, timing is everything. SSG.com, Market Kurly, and Oasis seemed to have lost momentum to take advantage of high market value,” said Seo Yong-gu, a professor at Women’s University of China. Sookmyung.

“As COVID-19 is expected to become an endemic disease, delayed consumption is likely to trickle down to offline activities like travel and shopping, prompting e-commerce platforms to see slower sales.”

Seo added that the upcoming shift in consumer trends may have affected SoftBank’s recent decision to sell its shares worth 1.2 trillion won to Coupang, one of the market leaders.

According to data from the Korea Online Shopping Association, online sales are expected to grow 9-13% this year, compared to an average of around 20% in recent years.

By Byun Hye-jin ([email protected])

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