Lotte Rental’s stake purchase may be used as valuation reference ahead of SoCar IPO Deal values Korea’s biggest car-sharing company at $1.1 bil

Translated by Ryu Ho-joung 공개 2022-03-11 08:08:13

이 기사는 2022년 03월 11일 07:56 더벨 유료페이지에 표출된 기사입니다.

Lotte Rental has valued SoCar at about 1.3 trillion won ($1.07 billion) in a recent deal that gave the car rental firm a 13.9% stake in the startup, potentially offering a valuation reference ahead of the car-sharing company’s planned initial public offering.

Lotte Rental said on Monday that it had bought 4,055,375 shares in SoCar from the startup’s 11 existing shareholders including Clarendon Investment for 45,172 won apiece. The deal valued SoCar, the biggest player in South Korea’s car-sharing industry, at approximately 1.3 trillion won.

The transaction comes after SoCar filed an IPO registration with Korea Exchange in early January. Given a typical lead time of two months, the country’s stock exchange is expected to complete its review as early as this month.

Some observers say the 1.3 billion won valuation could be used as a reference when the car-sharing company determines the IPO price, especially considering that an IPO prospectus is filed within one to two months after receiving the green light from the stock exchange.

The 1.3 billion won valuation represents only a slight increase from its October 2020 funding round where investors – including SoftBank Ventures and SG Private Equity – valued SoCar at about 1 trillion won.

SoCar’s listing valuation was estimated to be around 3 trillion won a year ago, based on the company’s 2021 revenue estimate of 300 billion won and Uber’s price-to-sales (P/S) ratio of 8-9 times as of early last year.

However, Uber’s P/S ratio fell to 4.6 times at the end of 2021 as the stock price of the US ride-hailing company sharply dropped over the year. P/S ratios of other car-sharing firms such as Lyft and China's Didi Chuxing also significantly declined in the same period.

SoCar is estimated to be worth about 1.38 trillion won based on its 2021 revenue estimate and the P/S ratio of 4.6 times, which is almost equal to what it was valued in the latest transaction.

“Existing shareholders in SoCar appear to have agreed to take a conservative approach to valuing the company after considering a steep decline in stocks of global peers and heightened market uncertainty,” an investment banking source said.

There are also views that the car-sharing company’s valuation is on track to reach 3 trillion won in its upcoming IPO.

“The valuation is typically expected to double in an IPO compared to the last private funding round,” an industry insider said.

“Some people said SoCar would target a 3 trillion won valuation in its IPO after Lotte Rental’s stake purchase was announced on Monday. There is also optimism that the car-sharing market is expected to grow considerably in the coming years.” (Reporting by Chul Kang)
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