Coupang’s $3.6 Billion IPO Shows U.S. Is King for Tech IPOs

South Korean e-commerce giant Coupang Inc.’s initial public offering is on track to be the largest listing by a Korean company in a decade. And, like most of the major tech offerings these days, it’s happening in New York…

There are three big reasons that explain why the U.S. is a better pick for the e-tailer backed by SoftBank Group Corp.’s Masayoshi Son. Perhaps most significantly, New York offers a considerable valuation premium. It also has a deeper, more liquid market, and allows uneven voting rights that would benefit Coupang’s founder, Harvard Business School drop-out Bom Kim.

The U.S. has been the destination of choice for mega tech IPOs, with 2020’s biggest debuts Airbnb Inc. and DoorDash Inc. both listed in New York. Chinese e-commerce giants such as Alibaba Group Holding Ltd. and JD.com Inc. also went public there. Coupang is seeking to raise up to $3.6 billion in its IPO and could garner a value of more than $50 billion. That would make it the largest float by a Korean company since Samsung Group took its insurance unit public at home in 2010.

Had the loss-making e-commerce firm listed in Korea — which from this month will allow unprofitable companies to go public — Coupang could have fetched a maximum valuation of just $10 billion, according to Suh YongGu, a marketing professor at Sookmyung University.

“The history of capitalism in South Korea is short, so Koreans don’t ascribe high valuations to loss-making companies,” said Suh.

South Korea’s stock market is less than 70 years old, and is dominated by chaebols, or family-controlled industrial groups. In fact, SK Bioscience Co., a unit of SK Group, one of the county’s largest chaebols, will be the latest to have a stock market presence when it goes public this month. The maker of AstraZeneca Plc’s Covid-19 vaccine for Korea, is seeking to raise $1.3 billion ahead of its March 18 listing, according to Korean-language Seoul Economic Daily Monday.

Korean investors’ appetite for their homegrown entrepreneur-led startups, however, will be tested in coming months with IPOs by Krafton Inc., the creator of hit game PUBG, and the country’s biggest mobile-only bank Kakao Bank. Unlike Coupang, those firms are profitable.

Coupang has lost money in the last three years, recording an accumulated deficit of $4.12 billion as of December, according to its filing. Thanks to the surge in online shopping during the pandemic, however, it managed to nearly double its revenue to $12 billion last year.

A $51 billion valuation would put Coupang among the five most valuable companies in Korea, of which Samsung Electronics Co. is the biggest. Korea’s other big startups with growing clout in e-commerce — the $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 not linked to the chaebols like Samsung Group.

In fact, Coupang’s listing in the U.S. will allow it to exceed the combined market value of the six chaebol-owned retailers trying 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 allure of the…

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