이 기사는 2020년 05월 25일 08시00분 thebell에 표출된 기사입니다

South Korea’s Insung Data has put itself up for sale with market attention focused on the estimated value of the company.

Insung Data, the operator of food delivery services app Logiall, has hired NH Investment & Securities to lead the sale of its controlling stake. “It is understood that the seller has put its value at around 400 billion won ($323 million),” a source familiar with the situation said.

The potential 400 billion won price tag represents a more than twofold increase in the company’s value over the last two years. In 2018 Insung Data raised a combined 26.3 billion won by issuing bonds and warrant (BW) and redeemable convertible preferred shares (RCPS) in a deal that valued the company at 193.5 billion won.

In the M&A market it is typical to use multiples for peer companies to estimate the target company’s value. But this approach cannot be applied to Insung Data because its major peer companies are currently making losses.

Given the company’s business areas of application software development and delivery services, the peer group includes Barogo and Mesh Korea. Barogo develops and distributes application software as well as provides delivery services through its wholly owned subsidiary. Mesh Korea also operates food delivery services platform Vroong.

Barogo’s 2019 financial statements are not available to the public. In 2018 its revenue grew 58 percent year-on-year, while at the same time operating loss increased nearly three-fold. Barogo recorded loss for three consecutive years from 2016 to 2018. Mesh Korea is also in the red.

But Mesh Korea’s latest funding could be used as a reference to Insung Data. In February, Mesh Korea raised funds with a valuation of 400 billion won. This represented a roughly 2.5 times increase in its value from the prior funding round in 2017 that valued the company at 155 billion won.

Adding to this, there are several factors that are positive for the valuation of Insung Data. Unlike its peers, Insung Data has recorded profit for the last three years. In 2019 it posted 10.2 billion won in earnings before interest, taxation, depreciation and amortization (EBITDA) and 5.2 billion won in operating income. In the domestic delivery services market the company holds the largest market share of 25 percent, with the number of orders exceeding nine million and more than five million of affiliated stores in 2019.

“Insung Data is one of few companies making profit in the delivery services market. This is a big plus for the seller,” another source said. “Its high number of orders, one of the key metrics for the valuation of delivery services companies, is another plus point.”

(Reporting by Byung-yoon Kim)