Competition is heating up among domestic and foreign private equity firms hoping to invest in T Map Mobility Co., a mobility spin-off of South Korea’s largest telecommunication carrier SK Telecom Co.
SK Telecom is seeking to raise up to 300 billion won ($275 million) to foster T Map Mobility as the country’s largest mobility service, as reported earlier.
The company recently shortlisted around four to five strategic investors and private equity firms, including IMM Private Equity and Affirma Capital, according to investment banking industry sources on Jan. 8.
The potential investors are currently conducting due diligence ahead of the final bid scheduled for mid-February.
T Map Mobility is a latecomer to the domestic mobility industry, which is currently dominated by Kakao Mobility. Yet, industry players have high expectations for the newcomer's growth potential, given that it is fully backed by SK Telecom, which has named mobility business as the group's future growth driver.
Also, SK Telecom's joint venture with the US ride-hailing company Uber Technologies Inc. may prove to be a game changer in the domestic industry, as the partnership should boost the mobility business in Korea by combining T Map Mobility's network of drivers and mapping technology with Uber's ride-hailing technology and global operations expertise.
Uber and the Korean mobility service will invest around $50 million and $100 million in the joint venture, respectively, based on T Map Mobility's enterprise value of 1 trillion won, a price deemed high by some industry watchers who say that the company has yet to deliver a meaningful performance.
SK Telecom holds over a 60% market share in the navigation market, but its presence in the taxi-hailing market remains low with a 20% market share. As for Uber, it only offers taxi-hailing services as its other operations Uber Eats and UberX were halted in Korea.
“PE firms, which usually buy controlling shares, are likely to take a prudent approach when reviewing the investment since they have to bet on the company’s growth potential,” said an investment banking industry official.
“There were mixed responses initially when TPG Capital invested in Kakao Mobility, but the results show that it was a good investment,” the official said.
It will be held up as a successful investment if T Map Mobility's union with Uber leads to robust activity in the market, according to the official.
“But the competition is going to intensify further since its rivals Kakao Mobility and Socar are also aggressively increasing mobility investment,” the official stressed.
SK Telecom aims to grow T Mobility to post 600 billion won in annual revenue with an enterprise value of 4.5 trillion won by 2025. A potential initial public offering is also in the pipeline in the mid to long term.
Write to Chae-yeon Kim at why29@hankyung.com
Danbee Lee edited this article.
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