이 기사는 2021년 09월 28일 08:02 thebell 에 표출된 기사입니다.

K Car, a South Korean used-car company, is inching closer to listing its shares on the Seoul stock exchange after getting the financial regulator’s nod for its initial public offering, which would value it at as much as 2 trillion won ($1.7 billion).

The company announced earlier Friday that its registration statement that was filed with the Financial Supervisory Service (FSS) on August 30 has become effective. This means the company passed the financial regulator’s scrutiny of large IPO deals.

An IPO registration statement becomes effective 15 working days after the filing date, during which the FSS can ask for revisions on any flaws or lack of information. K Car was asked to make only minor changes to its registration statement.

In contrast, with heightened scrutiny of big IPOs, many other companies that applied for listings earlier this year were asked by the FSS to make material corrections. This resulted in weeks of delays in their IPOs because such a type of revision requires another 15 working day period after the submission of the revised registration statement for it to become effective.

Among those companies were SD Biosensor ($664 million IPO in July), game developer Krafton ($3.6 billion IPO in August) and Kakao Pay whose IPO has been delayed to later this year. Corrections made by all the three companies were related to their valuation estimates, which were considered too high by the regulator.

The green light from the FSS allowed K Car to proceed with a listing with an original price range of 34,300 won to 43,200 won a share, which would value the company at 1.66 trillion won to 2.08 trillion won. K Car intends to raise between 577.2 billion won and 727 billion won through a listing.

Meanwhile, luxury handbag maker Simone Acc. Collection, which was on a similar IPO timetable, had to delay its 401 billion won listing to October after being asked by the FSS to submit the revised registration statement. This allowed K Car to avoid competition.

K Car already launched a two-week book-building process on September 13, with the majority of institutional orders expected to be received on Wednesday and Thursday, the last day of the institutional offering.

Upbeat growth potential

The minor changes made to the company’s registration statement were mostly about giving additional information on a potential impact of a pending regulatory change on market competition.

K Car has grown to the largest used-car company in South Korea, partly thanks to limited competition. The used-car market was included in the list of industries protected by the government from competition from conglomerates. That designation expired in February 2019, and the country’s SME ministry is now examining whether to include the market in the category with similar benefits.

If the used-car market is not included in the category, competition could be tougher than before due to potential market entry by conglomerates. If included, K Car could be regulated as a large player and the pace of its expansion could be slower than expected, the company said in its revised registration statement.

K Car has been upbeat about its ability to maintain its dominance in the market even if the competition intensifies, citing its professional staff and efficient system of conducting purchases, repairs, sales and deliveries of used cars. The company has been in the industry for 20 years and operates an app that buys and sells used cars online, with 41 offline stores and more than 1,000 professional employees.

K Car’s revenue has grown at an annual rate of 35.6% for the past two years, from 742.8 billion won in 2018 to 1.19 trillion won in 2019 and 1.32 trillion won in 2020. Its sales increased 40% year-on-year to 910.6 billion won in the first half of this year. (Reporting by Kyung-ju Lee)