SocarSouth Korea’s largest car-sharing start-up collapsed on its stock exchange debut in Seoul on Monday, even after shares fell below the bottom of a marketed range.
Shares of Socar rose 1.25% from its IPO price of 28,000 won ($21.10) in the opening minutes of its debut, before falling to 26,300 won to give the company a market cap of $642 million.
Last week, Socar lowered its targeted IPO offering to 102 billion won ($78.1 million), giving the car-sharing company a valuation of 966.5 billion won ($731 million) before the start of trading.
Socar’s debut comes amid a sluggish period in South Korea’s IPO market, which has prompted a series of Korean companies to postpone their listing plans.
Analysts attributed Socar’s lackluster performance on its debut day to an expensive valuation and slowdown in the IPO market that is reeling from the global economic downturn.
Socar CEO Jaeuk Park previously told londonbusinessblog.com that the company is pushing ahead with its IPO plans as it was confident in its performance and expected to generate both operating and net profit by the end of this year.
Rather than wait for the stock market to recover for a higher valuation in the next two to three years, he said, the Korean mobility startup prioritized investing in organic/inorganic growth with its IPO proceeds.
“First, Socar’s growth is faster than expected in light of the reopening [after the COVID-19 pandemic]Park said. “The stock market is expected to be difficult for the time being, but the mobility industry will grow rapidly that we should not miss this critical time; we will focus on accelerating mergers and acquisitions and investments in new businesses and technology.”
The company plans to ramp up its services and geographic expansion efforts through acquisitions to become a super-mobility app with the goal of achieving 1 trillion won ($748 million) in revenue by 2025, an increase of 289 billion won last year, Park continued. It aims for annual sales growth of 30% or more by 2025, he added.
Socar, the first and only unicorn mobility startup in South Korea, aims to become the first publicly traded profitable unicorn company, Park noted.
Socar, backed by SoftBank, and Korean strategic investor SK Inc, entered the unicorn club with approximately 183.2 billion won ($150 million) financing at a 1.3 trillion won (about $1 billion) in March from Lotte Rental, the car rental unit of South Korea’s Lotte Group. The startup has raised a total of 379.7 billion won ($284.2 million) since its inception in 2011 before its IPO.
The company’s major shareholders, including SoftBank, SK Inc, Lotte Rental and Altos Ventures, will retain their stake as they have agreed a lock-up period of up to six months.
The 11-year-old company, which started the car-sharing service with 100 rental cars in Jeju, now operates a fleet of more than 19,000 vehicles across the country and offers services including car-sharing, car hailing, electric bike rental, parking, vehicle management and vehicle maintenance. It will launch its transportation super-app later this year, which will provide all-in-one mobility services. In addition, Socar is building an ecosystem for future mobility, including an autonomous driving platform, charging stations for electric cars and micro-mobility.
Park said in an interview that Socar plans to enter the Southeast Asian market with its new business, fleet management system (FMS) B2B SaaS service that it plans to sell later in the fourth quarter of this year. Based on 19,000 vehicles, Socar has built the FMS technology that uses data such as vehicle location and environment to support effective monitoring and control systems and provide accurate information to drivers and management servers.
“FMS is different from carsharing, which has been Socar’s flagship product for the past ten years, and when stabilized it will be a B2B SaaS that guarantees a high profit ratio,” Park said.
Socar claims that the company has captured about 80% of the market share in South Korea, with more than 11.4 million users and 1.4 million monthly active users this year.
The Korean car company founded Socar Malaysia, a 79% stake owned by SK Inc, and launched services in Malaysia in 2018 and Indonesia in 2020.
Socar was founded in 2011 by Lee Jae-woong, who co-founded Daum Communications, South Korea’s largest internet portal operator; Daum merged with Kakao in 2014. Jaeuk Park, a serial entrepreneur, who founded VCNC, a couple messaging app called Between, sold VCNC to Socar in 2011. After the sale of VCNC, Park joined Socar’s chief strategy officer (CSO) to develop Socar’s ride-hailing company Tada and took on its chief executive officer (CEO) in 2020 after Lee stepped down.
Korean playmaker Krafton has taken over the messaging app unit from VCNC in May 2021, while Viva Republica, a Korean financial super app Toss operator, bought a 60% stake in TadaVCNC’s ride-hailing business, for an undisclosed fee in October last year.
Meanwhile, South Korea’s TMap Mobility, whose investors Uber Technologies and SK Inc’s investment company SK Square, said Monday it has raised $149.2 million (200 billion won) from strategic investor KB Bank. Another Korean car platform Kakao Mobility, which also planned an IPO between 2022 and 2023, said last week it has ended his sales pitch with the Korean private equity firm MBK Partners.