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Coupang’s $ 3.6 billion initial public offering shows the US is king of tech IPOs

(Bloomberg) – South Korean e-commerce giant Coupang Inc.’s IPO is well on its way to becoming the largest listing by a Korean company in a decade. And like most major technology offerings these days, this is happening in New York. There are three major reasons that explain why the US is a better choice for the e-tailer powered by Masayoshi Son of SoftBank Group Corp. is supported. Perhaps most importantly, New York offers a sizeable valuation premium. It also has a deeper, more liquid market and allows for unequal voting rights that would benefit Coupang’s founder, Harvard Business School dropout Bom Kim. The US has been the go-to destination for mega-tech IPOs, with Airbnb Inc.’s biggest debuts in 2020. and DoorDash Inc., both listed in New York. Chinese e-commerce giants such as Alibaba Group Holding Ltd. also went there. and JD.com Inc. publicly traded. Coupang aims to raise up to $ 3.6 billion on the IPO and could be valued at more than $ 50 billion. That would make it the largest float by a Korean company since its insurance unit was floated by the Samsung Group in 2010. Had the Korean-listed loss-making e-commerce company – which will allow unprofitable companies to go public this month – had coupang, according to Suh YongGu, a marketing professor at Sookmyung University, said, “The history of capitalism in South Korea is short, so Koreans don’t give high ratings to loss-making companies. “Said Suh. South Korea’s stock market is less than 70 years old and is dominated by chaebols or family-run industrial groups. In fact, SK Bioscience Co., a unit of SK Group, one of the county’s largest chaebols, will be the newest to be listed when it goes public this month. The maker of AstraZeneca Plc’s Covid-19 vaccine for Korea plans to raise $ 1.3 billion in the coming months with the initial public offering of Krafton Inc., inventor of the Korean-language Seoul Economic Daily Monday, ahead of the March 18 listing Hit game PUBG, and the country’s largest cell phone-only bank, Kakao Bank, are being tested. Unlike Coupang, these companies are profitable. Coupang has been losing money over the past three years, posting a cumulative deficit of $ 4.12 billion, according to its December filing. However, thanks to the surge in online shopping during the pandemic, it managed to almost double its sales to $ 12 billion last year. With a valuation of $ 51 billion, Coupang would rank among the top five most valuable companies in Korea, including Samsung Electronics Co.’s largest. Korea’s other big startups with growing e-commerce clout – $ 58 billion internet conglomerate Naver Corp. and the $ 39 billion messaging app Kakao Corp. – are both listed in Seoul, but were both profitable when they went public. The two are backed by entrepreneurs and are not affiliated with chaebols like the Samsung Group. Coupang’s listing in the US will allow the company to surpass the combined market value of the six Chaebol-owned retailers looking to expand their presence in e-commerce. – E-Mart Inc., Lotte Shopping Co., GS Retail Co., Shinsegae Inc., BGF Retail Co., and Hyundai Department Store Co. Liquidity is another stimulus to the US market that allows businesses to frequently raise funds Secondary companies to procure stock sales. According to Bloomberg data, the Korean stock market is a fraction of the US $ 44.2 trillion, valued at $ 2.12 trillion. “It is easier for investors to leave their shares in the US,” said analyst Seo Sang-Young at Kiwoom Securities in Seoul. “And the trading volume is much larger.” Finally, a US public listing gives founders more power. Korea does not allow uneven voting, favored by tech companies like Alphabet Inc. and Facebook Inc., who see this as a way for founders to focus on the long term. But the US is doing this, even if the ownership structure itself is not undisputed, as it lacks the protection of shareholders. Kim, the 42-year-old founder of Coupang, will receive 76.7% of the voting rights in the company with just 10.2% of its shares outstanding. “We would have liked to have Coupang listed in Korea,” said Kim Sung-gon, a spokesman for the Korea Stock Exchange. “But we respect the company’s decision.” The boom year for the IPO in Korea begins with Coupang FloatStill, which missed the chance to acquire itself in one of the hottest companies in the country in the largest IPO of an Asian company since the arrival of Alibaba Group Holding Ltd. $ 25 billion to participate The 2014 York listing ranks the retail investors who have dominated the Korean stock market since the pandemic spread. “Private investors certainly regret that they cannot participate in the IPO,” said Kim DongJoo, CEO of Iruda Discretionary Investment. A Seoul-based investment firm aimed at individual investors looking to buy overseas stocks. Biggest IPOs by Korean Companies: Coupang prides itself on delivering same-day, or at least before daylight, deliveries. In addition, warehouse workers and 15,000 full-time delivery workers will be given a total of $ 90 million in inventory prior to the IPO. This is a unique event that occurs at a time when the deaths of a number of couriers due to congestion due to the surge in online orders lead to a surge in national turmoil: “We believe we are the first company in Korea to that makes our frontline people shareholders, ”Kim said in a letter to shareholders in Coupang’s IPO. Five warehouse workers from Coupang, a large labor organization, died last year, according to the Korean. On Saturday, a Coupang delivery man was found dead in an incident that, according to Yonhap News, developed symptoms that his colleagues attributed to overload. In a statement Monday, Coupang said the deceased worker “worked an average of four days a week and worked about 40 hours for the past 12 weeks. However, it added that it would “make efforts to thoroughly protect the health and safety of workers” (updates to Coupang’s statement on recent worker deaths in the last two paragraphs) For more articles like this please visit us at Bloomberg.com Sign up now to stay up to date with the most trusted business news source. © 2021 Bloomberg LP