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Coupang chooses NYSE for IPO to take advantage of dual-class share

US listing will help CEO Kim Bom-seok keep control over e-commerce firm, market watchers say

Coupang CEO Kim Bom-seok (Coupang)
Coupang CEO Kim Bom-seok (Coupang)


South Korean e-commerce giant Coupang appears to have chosen to go public in the US, not in its home base, to keep its chief’s control over the company under a dual-class share system that is not allowed here.

The initial public offering application filed at the US Securities and Exchange Commission showed that shares that will be issued by the Seoul-headquartered firm will consist of two classes of common stocks - Class A with one voting right and Class B with 29 voting rights. Only the CEO will be given the Class B shares, according to the filing.

Companies that go public expose their governance to the market when issuing shares. By issuing different classes of shares, however, corporate founders are able to mitigate the risk and keep a majority of voting rights in their hands. Many founders of tech giants, including those at Google and Airbnb, have been able to maintain their ownership after their IPOs thanks to shares with strengthened voting rights. This dual-class share system is prohibited in the Korean market.

By owning Class B shares with more voting rights, Kim will be able to keep the control of Coupang after the planned IPO, and is expected to continue expanding investment and recruitment.

The company recruited 25,000 employees last year despite the ongoing coronavirus pandemic. It currently employs nearly 50,000 people and plans to create another 50,000 jobs by 2025.

“Our employees and frontline workers are the backbone of Coupang and one of the reasons for our success,” said the company in the IPO filing, adding “To continue to incentivize our employees and frontline workers, we plan to very broadly offer them the opportunity to receive equity awards through our equity plans so they can share in the future success of our company.”

The company also said it plans to offer frontline workers and non-manager employees up to $90 million.

Some market watchers said Coupang going public in the US is also aimed at avoiding a slew of regulations in the local stock market. A corporation that plans carry out an IPO scheme in the local market, for example, needs to offer 20 percent of newly issued stocks to members of employee stockholders association. In the US, Coupang will be free from doing so. Coupang may also fall short of meeting requirements for the IPO in the domestic market because of operating losses it has kept posting since its foundation in 2010.

The company, which has received $3 billion worth of investment from Japan’s SoftBank and its Vision Fund, has expanded its presence in the local ecommerce market with next-day delivery service, named Rocket Delivery.

It earned 11.9 billion won ($10.8 million) in revenue in 2020, up 91 percent from 2019, while posting an operating loss of $474.9 million.

Coupang is forecast to be valued at around $50 billion or more, far exceeding a previous valuation of $30 billion.

China’s ecommerce behemoth Alibaba received a valuation of $168 billion when it went public in 2014.

By Kim Young-won (wone0102@heraldcorp.com)
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