[KH Explains] Will Naver Webtoon, Yanolja be next Coupang?

Two Korean companies -- Naver Webtoon and Yanolja -- are preparing for a US stock debut this year, seeking higher valuation and aggressive overseas expansion.

Their US push comes after Coupang’s successful Nasdaq listing in 2021 when the company was valued at $63 billion, the biggest IPO in the US by a foreign company since Alibaba Group in 2014.

Industry watchers agree that the market sentiment has changed over the past three years following the bursting of pandemic-bubble stocks. But the two firms seem determined to push ahead with their US listing rather than waiting for the “right timing.”

Naver Webtoon eyes US expansion

Naver Webtoon, also known as Webtoon Entertainment in the US, submitted its application for a Nasdaq listing late last month, with several US investment banks joining as the deal advisors. If listed, its market cap is estimated to exceed $4 billion.

Its stock listing comes as its parent company Naver is reeling from a recent controversy surrounding its ownership of Line, a messaging app popular in Japan. It is being pressured to reduce its stake in A Holdings, its 50:50 joint venture with SoftBank that controls Line’s Japanese operation.

Currently, Naver is the largest shareholder of Naver Webtoon with 71.2 percent, followed by LY Corp., the merged entity of Line and Yahoo Japan, with 28.7 percent.

Even though Japan, known as the “kingdom of manga,” is a big market for comics and Naver has its footing there through diverse services, industry watchers say the US is a market with greater potential.

“There are already many competitors in Japan, which could affect its valuation negatively,” Lee Joon-ho, an analyst at Hana Securities, said of a possible listing in Japan. BlackRock, the US private equity firm, seeks to acquire Infocom, the operator of the Japanese comics platform Mecha Comic, while Big Tech firms, including Amazon and Apple, are also eyeing its entry into the lucrative market.

“The US, on the other hand, has a full potential for growth due to the lower psychological barriers to paid content consumption.”

With the planned IPO, Naver Webtoon is expected to ramp up marketing activities to expand its presence in the North American market.

Regarding the ongoing dispute over the stake sales of its Japanese joint venture, Kim Yong-hee, a professor at Kyunghee University's Graduate School of Media and Communication, predicted a limited impact, saying “Its equity relationship is relatively simple as Naver dominates more than 70 percent of the stake.”

Yanolja bets big on dual-class share system

After years of pandemic disruptions, Yanolja, the popular travel booking platform, aims to raise $400 million in its US listing. Its market valuation is estimated to range between $7 and $9 billion.

The company sought a listing in Korea in 2020 but took a strategic shift after receiving a $1.75 billion investment from SoftBank’s Vision Fund 2.

Established in 2005, Yanolja acquired Israel-based Go Global Travel last year to become one of the world's biggest travel platforms.

Industry watchers call the US market’s dual-class share system the primary reason why Yanolja picked the US for its market debut. The system allows issuing multiple voting rights for a single share owned by the company’s founder or top executive. Coupang CEO Kim Bom has also effectively maintained his control over the company through this system.

Lee Su-jin, the Yanolja founder and CEO, is also likely to secure his management rights by listing on Nasdaq. Currently, the company’s largest shareholder is Vision Fund with 24.9 percent. Lee has secured favorable shares of 41.1 percent, including his own 16.3 percent.

Kim Dae-jong, a business professor at Sejong University, said, “Listing on the US stock market provides a significant advantage, as it allows companies to secure more than ten times the dual-class shares compared to the domestic market.”

Analysts remain cautious about Yanolja’s US listing, citing that its valuation was almost cut in half over the pandemic years.

“As the peak valuation period for big tech companies in 2021 has passed, it might be difficult for companies like Yanolja to receive the same level of value upon listing,” said Kim Hyun-yong, an analyst at Hyundai Motor Securities.