Even though shares of Socar, South Korea’s biggest car-sharing firm, were priced at the low end of an advertised range, they fell in their Seoul stock market debut on Monday.
In the first few minutes after its debut, Socar shares increased 1.25% from their IPO price of 28,000 won ($21.10) before dropping to 26,300 won and giving the company a market worth of $642 million.
Prior to the commencement of trading, Socar last week reduced its planned IPO offering to 102 billion won ($78.1 million), giving the car-sharing business a value of 966.5 billion won ($731 million).
Socar’s launch coincides with a slow phase in the South Korean IPO market, which has caused a number of Korean firms to postpone their listing plans.
Analysts blamed an expensive valuation and a slowdown in the IPO market, which is suffering from the global economic slump, for the lacklustre success of Socar’s opening day.
Socar’s CEO, Jaeuk Park, previously told TechCrunch that the business was moving through with its ambitions to go public because it was confident in its abilities and anticipated to make both operational and net profits by the end of this year.
He said that the Korean mobility company preferred investing in organic/inorganic development with the revenues of the IPO rather than waiting for the stock market to rebound for a better value for the following two to three years.
First off, despite reopening [after the COVID-19 epidemic], Socar’s expansion is quicker than anticipated, according to Park. The mobility sector will develop quickly, so we can’t miss this crucial moment; we will concentrate on speeding mergers and acquisitions and investments in new enterprises and technologies. For the time being, the stock market is predicted to be difficult.
In order to become a mobility super-app and increase revenue from 289 billion won last year to 1 trillion won ($748 million) by 2025, the firm intends to expand its offerings and geographic reach via acquisitions. By 2025, it aspires to achieve yearly revenue growth of at least 30%.
Socar, the one and only unicorn mobility firm in South Korea, intends to become the first unicorn company to be listed that is also profitable, according to Park.
Socar, supported by SoftBank and Korean strategic investor SK Inc., joined the unicorn club in March with investment of nearly 183.2 billion won ($150 million) from Lotte Rental, the rental car division of the South Korean Lotte Group. Prior to its IPO, the firm raised a total of 379.7 billion won ($284.2 million) since its founding in 2011.
Major investors in the firm, such as SoftBank, SK Inc., Lotte Rental, and Altos Ventures, will continue to keep their shares since they consented to a lock-up period of up to six months.
The 11-year-old company, which began the car-sharing business with 100 rental cars in Jeju, now oversees a fleet of more than 19,000 vehicles throughout the nation and provides services such as car-sharing, car-hailing, electric bicycle rental, parking, vehicle management, and vehicle maintenance. Later this year, it will introduce its all-encompassing mobility super-app, which will include transportation services. Additionally, Socar is developing an ecosystem for future mobility that will include a platform for autonomous driving, an electric car charging service, and micromobility.
In a recent interview, Park said that Socar’s new company, a fleet management system (FMS) B2B SaaS service that it intends to start selling later in the fourth quarter of this year, aims to break into the Southeast Asian market. Based on its 19,000 cars, Socar developed the FMS technology, which leverages data from the locations and environments of the vehicles to enable efficient monitoring and control systems and provide precise information to the management servers and drivers.
If stable, FMS is a B2B SaaS that ensures a high-profit ratio and differs from car-sharing, which has been Socar’s hallmark company for the previous 10 years, according to Park.
With more than 11.4 million customers and 1.4 million monthly active users this year, Socar asserts that the firm has almost 80% of the market share in South Korea.
The Korean ride-hailing business established Socar Malaysia, in which SK Inc. has a 79% share, and started offering services there in 2018 and in Indonesia in 2020.
Lee Jae-woong, one of the co-founders of South Korea’s biggest internet portal operator Daum Communications, created Socar in 2011. Daum Communications merged with Kakao in 2014. Serial entrepreneur Jaeuk Park launched between, an operators messaging software for couples, in 2011, and sold Between to Socar in 2018. When the sale of VCNC, Park joined Socar as its chief strategy officer to oversee its ride-hailing company Tada. In 2020, after Lee stepped down as CEO, Park assumed the position of CEO.
While Viva Republica, a Korean financial super app Toss operator, purchased a 60% share in Tada, the ride-hailing company of VCNC, for an unknown sum in October last year, the messaging app division of VCNC was acquired by Korean game producer Krafton in May 2021.
TMap Mobility, a South Korean company with Uber Technologies and SK Square as investors, said on Monday that it had received $149.2 million (200 billion won) from strategic backer KB Bank. A second Korean car-hailing company, Kakao Mobility, which also had an IPO scheduled for 2022 to 2023, said last week that it had ended its discussions with MBK Partners, a local private equity group, over a sale.
