SPH could see strong returns from Coupang IPO

Valuation listing of South Korean e-commerce firm on NYSE seen to hit $66b

A Coupang employee unloading fresh food from a truck in Bucheon, South Korea. Founded in 2010, Coupang is a major e-commerce and on-demand food delivery player in the country. A listing on the New York Stock Exchange could spell gains for SPH and the
A Coupang employee unloading fresh food from a truck in Bucheon, South Korea. Founded in 2010, Coupang is a major e-commerce and on-demand food delivery player in the country. A listing on the New York Stock Exchange could spell gains for SPH and the family office of Trafigura's Asia-Pacific chief executive Tan Chin Hwee. PHOTO: BLOOMBERG

Two locally based investors of South Korean firm Coupang - Singapore Press Holdings (SPH) and the family office of Trafigura's Asia-Pacific chief executive Tan Chin Hwee - could reap strong returns if the firm undertakes a planned US$50 billion (S$66 billion) listing.

SPH, which publishes The Straits Times and The Business Times, invested an undisclosed sum in the e-commerce company in mid-2014 through a special purpose vehicle.

Mr Tan, who is also an independent director at SPH, declined to disclose when and how much he invested.

Coupang was valued at US$5 billion in June 2015, after SoftBank invested US$1 billion. Founded in 2010, it has grown rapidly into a dominant e-commerce player in South Korea.

It has filed its prospectus to go public on the New York Stock Exchange. Its expected valuation of US$50 billion could make it the largest listing by a foreign firm in New York since Alibaba's 2014 debut. This could also imply a return of more than tenfold for SPH.

Mr Julian Tan, SPH's chief of digital business, said the Coupang investment was made with the view that the e-commerce model is highly disruptive: "We already saw e-commerce as the future. If you look at our strategy at that time, not only did we go into Coupang, we invested in Qoo10 as well."

In 2015, SPH led a US$112 million investment round in e-commerce platform Qoo10, a joint venture between eBay and Gmarket, a South Korean e-commerce site that eBay had acquired.

Mr Tan also noted: "We saw that the Korean market was starting to grow. Digital adoption is very strong and the market is sizeable as well. There are reports saying that it's going to be one of the largest e-commerce markets in the world after the US and China."

Separately, Mr Tan Chin Hwee said he was convinced about the company's potential after hearing a presentation from its founder, entrepreneur Kim Bom-suk.

"Mr Kim's first professional presentation was to my son many years back with my family. His ability to keep a 10-year-old interested in the hour-long presentation is a testimony to his ability to think tactically and strategically. It is a rare feat for management to have both skill sets," he added.

"Full credit to the team and directors, such as Matthew Christensen, for tactically executing the strategic vision, despite tremendous competition from deep-pocketed rivals."

Mr Christensen is managing partner of venture capital firm Rose Park Advisors and has served on Coupang's board since 2010.

Market watchers have been largely optimistic about Coupang's financials, even though the company is still loss-making. In its prospectus, the firm revealed a near-doubling of total net revenue to US$12 billion for the 2020 financial year, while its full-year net loss shrank from US$698.8 million to US$474.9 million.

Coupang is also a major player in on-demand food delivery and has ventured into fintech.

Analyst Douglas Kim noted on Monday that Coupang could rack up net revenue of US$16.5 billion this year and US$19.9 billion next year.

"Coupang's strong sales growth is a testament to its ability to take away market share in South Korea from other e-commerce providers and bricks-and-mortar retail shops, combined with once-in-a-lifetime opportunity created by the Covid-19 pandemic," he said.

THE BUSINESS TIMES

A version of this article appeared in the print edition of The Straits Times on February 26, 2021, with the headline 'SPH could see strong returns from Coupang IPO'. Subscribe