[IPO Spotlight] 'E-Book Subscription' Millie’s Seoje, Can It Sail Through IPO Amid Platform Crisis?

Expansion of Content Including Audio and Chatbooks
Subscriber Growth from KT Acquisition Synergy
2 Million Shares Offered as Performance Weapon
Venture Capital (VC) Exit Report in Focus

[Asia Economy Reporter Kwangho Lee] KT Group-affiliated electronic reading platform company ‘Millieoseoje’ is set to officially begin its public offering (IPO) schedule next month. It has drawn attention by taking on the challenge amid a frozen investment sentiment toward platform companies. The company is aiming for listing by utilizing the special exemption method for unprofitable companies (Tesla requirements). It is being watched whether it will mark the IPO finale at the end of this year.

Millieoseoje is a reading platform company established in 2016. It gained recognition by launching the country’s first subscription-based e-book service. Leading with a monthly unlimited e-book service famous for the slogan ‘Get unlimitedly close to reading,’ it has strengthened its market dominance. It boasts the number one position in the domestic monthly unlimited e-book service sector.

Currently, it holds about 120,000 e-books. While steadily increasing its e-book collection, it has also added audiobooks, audio dramas, and chat books (chat-based reading content). It expanded its content area centered on books. Then, in September last year, it was acquired by Genie Music, a KT’s music service subsidiary, and incorporated into the KT Group. The governance structure follows the order ‘KT → KT Studio Genie → Genie Music → Millieoseoje.’

Millieoseoje has grown steadily by continuously receiving external funding since its seed investment in 2016. In 2017, it secured venture capital (VC) allies starting with HB Investment. In 2018, KB Investment executed investment funds. In 2019, it received investment from Korea Investment Partners. In addition, prominent financial investors (FIs) such as Kolon Investment and Stick Ventures participated.

These FIs partially exited by selling some shares when KT acquired Millieoseoje last year. According to the securities registration statement submitted by Millieoseoje, VCs currently hold 24.29% of Millieoseoje’s shares. These include ▲HB Investment (HB Promising Service Industry Investment Association 8.50% · HB Youth Startup Investment Association 3.72%) ▲KB Investment (KB KONEX Activation Investment Association 4.96%) ▲Kolon Investment (Kolon 2015 K-ICT Digital Content Investment Association 3.82%) ▲Stick Ventures (Stick 4th Industrial Revolution Fund 3.29%).

The success of Millieoseoje’s IPO will determine the performance record of the VCs. The investment industry is paying close attention to Millieoseoje’s moves. Not only the VCs who invested in Millieoseoje but the entire industry is focused on it. This is because Millieoseoje has thrown down the gauntlet amid a series of IPO postponements due to recent valuation adjustments of platform companies.

Millieoseoje relies on its performance as a weapon. Although it recorded operating losses until last year, it posted a profit for the first time in the first half of this year. It recorded sales of 21.1 billion KRW and operating profit of 1 billion KRW in the first half. The securities registration statement also includes third-quarter results for this year. Although the financial statements have not yet been audited or reviewed, operating profit exceeded the cumulative figure for the first half. Third-quarter sales were 12.4 billion KRW, with operating profit of 1.9 billion KRW.

The increase in subscribers due to synergy effects with KT Group affiliates is also notable. In February, Millieoseoje signed a service supply contract with KT and launched a product combining plans and subscription rights. The cumulative number of members, which was 4.18 million at the end of last year, increased to 5.47 million as of August, and the number of subscribers rose from 390,000 to 910,000 during the same period.

Previously, Millieoseoje planned to proceed with the public offering schedule at the end of October but postponed it to November. Although various speculations arose at the time, it is interpreted as a strategic move to show positive figures such as performance and subscriber numbers. The demand forecast date is November 4?5, subscription dates are November 10?11, and payment date is November 15, slightly changed from the originally announced schedule.

The total number of shares offered is 2 million, with a desired offering price of 21,500 KRW to 25,000 KRW. The total expected offering amount is 43 billion to 50 billion KRW. Based on the offering price, Millieoseoje’s market capitalization is expected to be between 186 billion and 216.3 billion KRW. To meet the desired offering price band, market expectations for profitability must be satisfied. Despite the recent return to profitability, concerns about the business model and IPO success remain.

The fact that major platform companies have consecutively postponed their listings is also an unsettling factor. Native app store One Store withdrew its listing after the demand forecast due to poor reception. Socar lowered its offering price below the desired range during the public offering process, yet its stock price after listing was about 33% lower than the offering price. Large platform companies such as dawn delivery company Kurly and internet bank K Bank have yet to finalize their listing schedules.

A platform-specialized investment analyst said, “It has become much more difficult for platform companies to go public,” adding, “There is no guarantee of good results even if they postpone the IPO aiming for a better time.” He further added, “FIs cannot just keep waiting indefinitely.”