Socar 'Series E' Investment by Songhyun Invest and SG PE 'Emergency'

'1 Jo Value' Investors Face Inevitable Losses
Can All IPO Shareholders Agree?

[Asia Economy Reporter Kwangho Lee] As the comprehensive mobility platform company Socar is likely to lower its valuation and proceed with an IPO (Initial Public Offering), attention is focused on the exit performance of financial investors (FIs). Early-stage FIs are in a profitable position, but those who participated in later-stage investments may incur losses.

According to the investment banking (IB) industry on the 9th, Socar will decide whether to proceed with the listing and determine the public offering price and volume after consultations among shareholders. The issue lies in whether the shareholders agree. During the two-day demand forecast conducted on the 4th and 5th, the institutional competition rate fell short of the expected 50 to 1, increasing the likelihood of a lower corporate valuation.

FIs that bet on Socar’s success and invested include Bain Capital, IMM PE, Altos Ventures, KB Investment, Stonebridge Ventures, SoftBank Ventures, Songhyun Investment, and SG Private Equity (SG PE). Various PEs and VCs have participated together from Socar’s Series A through Series E rounds.

In particular, the FI holding the largest stake is IMM PE. It participated in Socar’s Series C round in 2018, investing 60 billion KRW. It currently holds 2,423,796 shares (8.33% stake). The estimated purchase price per share was about 24,754 KRW. Considering the currently discussed public offering price is around 28,000 KRW, it is highly likely that the return will be a poor performance of less than a 2x multiple.

At the time IMM PE invested in 2018, Socar’s Series C valuation was about 570 billion KRW. The following year, during Series D, it increased to 770 billion KRW. Then, in the 2020 Series E round, Songhyun Investment and SG PE invested 60 billion KRW, achieving a valuation of 1 trillion KRW and earning the ‘unicorn’ title.

Although Socar steadily raised funds and expanded its size, there is a possibility that it will push to lower the price below the 1 trillion KRW level after the demand forecast. If it drops to the 900 billion KRW range, Songhyun Investment and SG PE will incur investment losses.

The listing process requires unanimous consent from all shareholders. However, it is difficult for them to agree under these circumstances. Earlier, Socar CEO Jaewook Park firmly stated, “There will be no withdrawal of the public offering,” but the IB industry does not rule out the possibility of withdrawal.

An IB industry official said, “The public offering price has not been finalized yet,” adding, “Unanimous consent from all shareholders is required, but for FIs who invested later, there is absolutely no reason to agree.”