South Korea’s online retailer Coupang Corp. is looking to secure a credit line of up to $1 billion from the underwriters of its US initial public offering, which is expected to raise more than $4 billion.
The credit facility, if obtained, can be drawn upon when needed, as the Korean e-commerce giant finds it difficult to tap the corporate bond market due to its cumulative losses of $4.2 billion as of the end of last year, according to investment banking sources on Feb. 17.
To enhance its liquidity position, Coupang is following in the footsteps of global startups such as Airbnb, Uber and DoorDash, which had arranged credit facilities ahead of their US IPOs. This was first reported by the Maeil Business Newspaper and confirmed by the sources.
Obtaining credit before going public is a common negotiating tactic to get better financing terms from IPO managers.
Coupang, 37% owned by SoftBank Group,
submitted its IPO application to the US Securities and Exchange Commission last week to become the first South Korean company to list directly on the New York Stock Exchange.
The company is expected to hit a valuation of over $50 billion for the IPO, expected to take place in late March or April. It looks set to mark the largest listing for a non-US company in New York, since the Chinese retailer Alibaba Group’s $25 billion IPO in 2014.
Coupang's IPO underwriters include Goldman Sachs, JPMorgan, BofA Securities, Citigroup, HSBC, Deutsche Securities, UBS, Mizuho Securities, Allen & Company and CLSA. They have banking arms, excluding Allen & Company and CLSA.
“On the occasion of an IPO, building relationships with several financial institutions will be advantageous in the medium to long term,” an investment banking source was quoted as saying by Maeil.
Despite double-digit revenue growth, Coupang has remained in shortfall territory, weighed by aggressive marketing and facility investment. But it narrowed its operating losses to $475 million last year versus the previous year’s $699 million and in the same period swung to a positive cash flow of 332.3 billion won ($300 million), buoyed by a surge in sales since the start of the global pandemic.
Envisioning a logistics platform, Coupang runs over 100 fulfillment centers in more than 30 cities across the country. Its delivery workers total around 15,000, compared with the 20,000 delivery employees of CJ Logistics Corp., South Korea’s top parcel delivery company.
Write to Sang-eun Lucia Lee at
selee@hankyung.comYeonhee Kim edited this article.
