Sunday, March 8, 2015

BlackRock Leads $300 Million Financing Round for South Korean Online Retailer

http://www.wsj.com/articles/blackrock-leads-300-million-financing-round-for-south-korean-online-retailer-1418218444

Coupang Has Garnered Interest From Investors Looking to Access Asian Consumers

JONATHAN CHENG

Dec. 10, 2014 8:34 a.m. ET

SEOUL— BlackRock Inc. is adding its name to a roster of high-profile investors betting on Asia’s fast-growing technology startups by leading a $300 million financing round for South Korean online retailer Coupang that will value the company at more than $2 billion, according to a person familiar with the matter.

Coupang has already attracted investments from Silicon Valley venture-capital firm Sequoia Capital, which led a $100 million funding round in April, and hedge-fund investorWilliam Ackman .

The latest deal paves the way for a possible U.S. listing for Coupang and is a vote of confidence for one of the hottest companies in South Korea’s burgeoning startup scene. The latest round of financing also underscores U.S. investors’ rising interest in tapping Asia’s increasingly prosperous consumers.

Last month, Goldman Sachs Group Inc. led a round of investment in Seoul-based Woowa Brothers Corp., operator of a popular South Korean food-delivery mobile service.

Coupang, which describes itself as the Amazon.com of South Korea, draws more than 70% of its revenue from smartphone users domestically.

The new investment will give South Korea’s largest online retailer, formally known by its corporate name Forward Ventures Co., a war chest of about half a billion dollars, which it will plow into research and development to improve its mobile service and logistics network.

Unlike Amazon.com, Coupang controls the entire retail process, from stocking products in warehouses to operating distribution centers to hiring a fleet of delivery men, who can deliver most items within a few hours.

Coupang was founded by Bom Kim, who dropped out of Harvard Business School in June 2010 to start the company. Initially, Coupang operated as a daily deals service, akin to Groupon Inc., before moving into selling physical merchandise from third-party vendors.

Beginning in 2012, Coupang transitioned to a model that hews closer to that of Amazon.com by selling merchandise directly to consumers. It retained the daily-deals business and the third-party marketplace as a small portion of sales.

The company also moved into the delivery business earlier this year, replacing third-party couriers with salaried truck drivers.

Coupang is growing quickly. Though the privately-held company doesn’t reveal sales and profits figures, the company says it is on pace to average $2.2 billion in annual gross sales. The company said its app has been downloaded by a third of the South Korean population.

All of its sales currently come from within South Korea. The company doesn’t ship overseas and due to domestic regulations, it can’t store users’ credit card information. That means that, unlike on Amazon.com, Coupang customers have to enter their payment details each time they make a purchase.

Mr. Kim has said in interviews that the company was seeking a Nasdaq listing. Mr. Kim declined in an interview this week to elaborate on the company’s listing plans, but confirmed that the company is eyeing a U.S. listing.

For BlackRock Private Equity Partners, the investment in Coupang comes after leading stake investments in other pre-IPO companies, including New Relic Inc., an app-analytics firm, and Hortonworks Inc., a data-crunching software company. Earlier this month, the two companies proposed to seek IPOs.

In addition to BlackRock Private Equity Partners, Boston-based Wellington Management Company LLP is also investing in the company.

The previous round in April, which valued the company at more than $1 billion, was led by Sequoia Capital Global Equities and Sequoia Heritage.

Coupang’s other investors include Harvard Business School investment guru Clayton Christensen, as well as hedge fund Maverick Capital Ltd., which is planning to launch its first venture-capital fund next month.

Mr. Ackman, the founder and chief executive of activist hedge fund Pershing Square Capital Management LP, is investing in a personal capacity.

Write to Jonathan Cheng at jonathan.cheng@wsj.com