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(EDITORIAL from Korea Times on Feb. 17)

Editorials from Korean dailies 07:13 February 17, 2021

Coupang's listing on NYSE
Korea's e-commerce giant heads for U.S. with fewer regulations

Coupang has submitted an application to the U.S. Securities and Exchange Commission (SEC) to have its stock listed on the New York Stock Exchange. The e-commerce giant is the first Korean company directly seeking to go public on the NYSE. The Wall Street Journal estimated Coupang's corporate value at $50 billion (55.4 trillion won), saying it is "the biggest initial public offering by a foreign company since China's Alibaba Group went public in 2014."

If realized, this move will reduce Korean investors' opportunities in the domestic IPO market. Coupang seems to have opted for New York to get a higher valuation of its corporate worth. The market capitalization of Emart, Korea's largest distribution company, falls short of 5 trillion won, but Coupang is likely to be valued 10 times higher on the NYSE.

This fact shows how undervalued the domestic stock market is, although the composite stock price index has broken the 3,000 mark. The Korea Stock Exchange's price-earnings ratio remains at a multiple of 15, far lower than the 24 of the U.S. and Japanese stock markets. Experts cite various reasons for such a low evaluation, including weak funding power, unfavorable taxation, low dividends and excessive regulation.

Another important reason is the dual-class rights system. Coupang plans to give 29 times greater voting rights per share to Executive Board Chairman Kim Bom-seok when it goes public on the NYSE, in a system that has yet to be introduced to Korea but has long been available in America. By utilizing this, Kim will be able to protect his management control and hold off hostile acquisition attempts.

Last December, the government submitted a venture business bill to the National Assembly to give dual-class rights of up to 10 times per share to the founders of unlisted venture enterprises. There is considerable opposition to the bill as family-run conglomerates, or chaebol, could abuse it for the illicit transfer of management control to their owners' children. However, it is time to speed up the introduction of the dual-class rights system, allowed by more than half of OECD member nations, to help businesses protect management control and not miss out on IPO chances.
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