이 기사는 2020년 04월 07일 08:00 thebell 에 표출된 기사입니다.

TMON Inc.’s IPO plan has been met with a lukewarm response from investment banks.

South Korean online shopping platform TMON recently conducted a presentation competition to pick a firm to lead its planned IPO. The competition was participated by three brokerage firms – Samsung Securities, Daishin Securities and Shinhan Investment.

Given the fact that TMON originally worked with Samsung Securities during its first attempt to list in 2017 as well as that the IPO is estimated to be worth more than one trillion won, investment bankers’ response to the ecommerce company’s listing plan seems fairly lukewarm, market watchers said.

“Investment banks were very enthusiastic about Big Hit Entertainment’s planned trillion-won IPO, with even some that were not invited to the competition eager to present their proposals,” a market observer said. “This contrasts with the TMON’s case where some of brokerage firms decided not to participate in the competition even after they received a request for proposal from TMON.”

TMON has faced a chilly response from investment banks because of limited flexibility to set the IPO price. TMON’s largest shareholders include KKR and Anchor Equity Partners, which are PE firms. This means there is a minimum flotation value set by the company as its PE shareholders need to deliver a certain level of returns.

Some brokerage firms, therefore, have apparently chosen not to join the race in the first place, especially if the company’s valuation target is much higher than the expected value estimated by them. TMON’s IPO valuation is currently estimated to be between 1.5 trillion won and two trillion won.

A game of chicken

A game of chicken in the South Korean ecommerce industry has continued for years. With the paradigm shifting from brick-and-mortar to online shopping in the retail industry, the competition among domestic ecommerce companies is only getting tougher, casting clouds over the outlook for them.

This is one reason why some brokerage firms are wary of underwriting the IPOs of ecommerce companies. TMON, Coupang, WeMakePrice and many other market players including eBay Korea and Eleven Street are in a race to increase their market share. They continue to pour money to attract consumers and upgrade the logistic infrastructure.

TMON recorded revenue of 500.6 billion won and an operating loss of 127.8 billion won, respectively, for 2018 on a consolidated basis. Moreover, Lotte Group and Shinsegae Group, the two traditional retail giants with deep pockets, are accelerating efforts to enter the ecommerce market, which also could trigger a market disruption.

TMON will likely seek to list on the Kosdaq, which allows loss-making growth companies to apply for IPOs as long as they meet certain requirements. This means that a brokerage firm managing the TMON IPO needs to provide a put back option to investors, which also could increase the burden on the lead underwriter.

(By reporter Yang Jung-woo)