SoCar poses as the next hot IPO from Korea on stable subscription business model

2021.03.08 14:08:47 | 2021.03.08 15:15:11

[Photo provided by SoCar Inc.]이미지 확대

[Photo provided by SoCar Inc.]

SoCar Inc., the largest car-sharing service platform in South Korea, is emerging as a potential hot IPO as the pioneer in subscription-based business model.

SoCar is progressing with stock market debut under lead managers Mirae Daewoo Asset and Samsung Securities, according to investment bank industry sources on Sunday.

It would make a rare Korean unicorn IPO as the company’s valuation hit $1 billion after pulling in additional funding of 60 billion won from SG Private Equity and Songhyun Investment last year.

SoCar generates stable revenue for a mobility startup, thanks to its strong pay membership system through 50-percent discount for access to monthly car use.

The mobility platform reported revenue of 256.7 billion won ($227.4 million) in 2019, up 38 percent from a year earlier and tripled from three years ago. It recorded operating loss of 71.6 billion won in 2019, but it was mostly due to losses from discontinuation in van-hailing service Tada.

Coupang, eying $3.6 billion in IPO and $51 billion valuation after its New York Stock Exchange listing this month, has become unrivalled in e-commerce in Korea through its loyal membership program.

Of 14.8 million active customers to Coupang, 4.8 million were registered with Rocket Wow, whose monthly subscription fee exempts delivery charge, as of end of last year. Coupang found the subscribed members made purchase four times more than general customers.

“A subscription service not only allows a firm to collect revenue repeatedly but it also locks in customers, thus boosting customer loyalty,” said an investment bank industry official.

Having recurring revenue has become a big merit for firms as it now needs more than traditional profitability measures such as earnings before interest, taxes, and amortization (EBITA) to evaluate new type of businesses such as online platform providers like Amazon, the official added.

By Park Chang-young and Cho Jeehyun

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