Logistics startup Mesh Korea denies sell-off rumors

South Korea’s logistics startup Mesh Korea -- operator of algorithm-powered micro delivery service Vroong -- denied rumors Monday that it is selling the stakes of its executives, amid a growing conflict between its CEO and other major stakeholders.

The deal manager Samjong KPMG is reportedly looking for potential investors in Mesh Korea’s newly issued stocks and shares of existing investors. The exact stake a new investor will control remains unknown, while retailer E-mart reportedly expressed interest in the deal. Samjong KPMG declined to comment on the matter. 

While news reports claimed its CEO Rhyu Jung-bum and executives are seeking to exit from the company, Mesh Korea refuted the rumors saying the deal is meant to resume fundraising talks that commenced early last year.

“Mesh Korea’s executives do not intend to divest their stake,” a company spokesperson said. “We are seeking to raise capital to establish more four-wheeled vehicle riders for delivery service and enhance the transportation management system.”

Founded in 2013, the Vroong service offers users last-mile delivery of a variety of items for franchises, ranging from food items to consumer goods. Its delivery network comprises some 33,000 freelancing motorcycle riders, while its own algorithm cuts the cost of order processing and delivery of goods.

But the company, considered as the next Korean candidate to become a unicorn -- with a valuation of over $1 billion -- is facing a management crisis as some shareholders are opposed to Rhyu.

Rhyu in July 2019 apologized for fabricating his academic credentials and work experience in the United States. Two months later, he dismissed Mesh Korea COO Park Jun-kyu, who was recommended by one of its shareholders Humax, while a litigation was ongoing.

Notable shareholders of Mesh Korea include internet giant Naver, electronic device maker Humax and Hyundai Motor. Venture capital firm Solborn Investment and SK Networks also hold a minority stake in the startup.

As of end-2018, Naver was the largest shareholder with 20.9 percent stake, followed by Humax’s 18.4 percent and Rhyu’s 16.8 percent.

By Son Ji-hyoung (consnow@heraldcorp.com)