Coupang staged a stunning NYSE debut on Thursday that pushed its market cap beyond US$100bn at one point, despite pricing its US$4.6bn IPO above an already increased range at the end of a white-knuckle ride for US tech stocks.
Although the Nasdaq slumped 2.9% on Monday, the South Korean e-tailer held its nerve and lifted its marketing range the next morning to US$32–$34 a share from US$27–$30 at launch while upsizing the offering to 130m shares (76.9% primary/23.1% secondary) from 120m.
The deal eventually priced at US$35. The shares opened up 81% at US$63.50 on Thursday and rose as high as U$69.00. The stock eased later on to US$49.25, up 40.7%, for an US$84bn valuation.
Some investors who were unable to get a decent piece of the action said the SoftBank-backed issuer and lead-left bookrunner Goldman Sachs allocated the blockbuster IPO to far too tight a group of investors. Only 30–40 accounts got shares, according to one source close to the deal. As a result, 95% of orders were zeroed, a move some ECM observers described as “ridiculous”, “a little bit too extreme” and even “self-serving”.
Though Goldman applied its “GS TOP” auction process to take the bids for stock directly, the allocation process saw Coupang and Goldman handpick long-term holders, with the company insisting on an "extremely curated" approach that favoured US rather than South Korean accounts. That left others to try their luck in the aftermarket, contributing to the initial pop.
It was an unusual deal in some respects given Goldman and the other lead bookrunners ran it out of the US rather than Asia (unusually Coupang is headquartered in Seoul but domiciled/incorporated in Delaware and it sold shares, not American depositary shares).
As the biggest US IPO since Uber Technologies in May 2019 and the biggest foreign listing since Alibaba Group Holding debuted on the NYSE in 2014 – and potentially the biggest US IPO of 2021 – it was certainly a trophy deal for Goldman. It was also a win for arguably the market’s biggest dice-thrower, Masayoshi Son, the Japanese billionaire who founded Softbank. SoftBank's Vision Fund, which did not sell any shares in the offering, holds about 33% of Coupang's shares, worth nearly US$28bn at Thursday’s close.
BlackRock, which sold 26.8m shares in the IPO, retains a 1.5% stake. Founder and CEO Kim Bom-seok still owns about 10.2% of the company, but his super-voting shares will grant him 76.7% of voting rights.
Move aside Amazon
The deal also confirmed the investor appeal of South Korean e-commerce, the fastest growing e-commerce market outside China.
Venture capital firm Goodwater Capital said Coupang was "out-Amazoning even Amazon", given it has taken the Amazon-pioneered model and adapted it to local consumer preferences with its next-day "rocket delivery" service. Goodwater’s co-founder Eric Kim was managing director at Maverick, an early investor in Coupang and served on the company’s board from 2011 to 2017.
Goldman, Allen & Company and JP Morgan were bookrunners (with 70% of the underwriting) alongside Citigroup, HSBC, Deutsche Bank Securities, UBS, Mizuho and CLSA.
South Korea's domestic market also hosted a hot new listing last week as biotech SK Bioscience priced a W1.49trn (US$1.3bn) IPO, the largest in the country since 2017. The stock will start trading on March 18.
The company, which is working on the rollout of Covid-19 vaccines, offered around 23m primary and secondary shares, or 30% of the capital on listing, for a a valuation of W4.97trn.
Demand was so strong that the institutional book was covered 1,200 times with the participation of some 1,400 investors, of which 60% have accepted a voluntary lock-up of 15 days to six months, according to a person close to the deal.
That tied up the equivalent of US$1.56trn, almost equal to South Korea’s US$1.6trn GDP last year and nearly triple the US$554bn orders for K-pop agency Big Hit Entertainment’s W963bn float, last year's largest IPO in South Korea.
Retail investors placed a record W64trn in a two-day subscription period, surpassing two records set last year – W58.6trn for gaming company Kakao Games and W58.4trn for Big Hit.
The success of the Coupang and SK Bioscience deals may encourage LG Energy Solutions to press ahead with a planned IPO of around US$10bn which would be the country's largest and has been expected in the second half. The electric vehicle battery maker mandated Morgan Stanley and KB Securities to lead the deal in January. The listing venue has not been chosen yet, but a dual listing in Seoul and the US is under consideration given the fundraising size.
SK Bioscience, which was spun off from KRX-listed SK Chemicals in July 2018, has contracts to produce Covid-19 vaccines for AstraZeneca which has already been approved for use in several countries, and one for Novavax which is at the late-stage clinical phase. It also collaborates with GlaxoSmithKline to run clinical trials on the vaccines.
NH Investment & Securities was the lead manager for the SK Bioscience IPO and Korea Investment & Securities and Mirae Asset Daewoo were co-managers.