Korean unions’ value plummet amid liquidity shortage

The enterprise value of South Korea’s union startups, from online lender Toss to crypto exchange Upbit and fresh grocery delivery platform operator Kurly, has plunged as investors are shunning startups on excessive valuation concerns amid prolonged liquidity crunch.

According to Seoul Exchange, a trading platform for unlisted stocks in Korea, shares of Viva Republica, the operator of the country’s third-largest internet-only lender Toss traded at 44,500 won ($33.39) apiece on Thursday, which is only about one quarter of its peak on Nov. 24, 2021. Its market capitalization, accordingly, contracted to 7.7 trillion won from 9.1 trillion won over the same period.

Shares of Kurly, the leading online grocery store Market Kurly operator in process to go public, are now trading at around 29,000 won per share versus its peak of 119,000 won touched on Dec. 9, 2021. Its market cap shriveled to 1.1 trillion won from 4 trillion won.

Enterprise value of Dunamu, the operator of the country’s largest cryptocurrency exchange Upbit, also plummeted. Last week, app giant Kakao disclosed that the book value of its holding of 3.69 million shares in Dunamu was estimated at 578.0 billion won, which was transferred to its subsidiary Kakao Investment. In the second quarter, Kakao estimated the worth of 3.77 million shares in Dunamu at 1.5 trillion won.

[Photo by Park Hyung-ki]

Yanolja, a leading accommodation booking app, is no exemption.

Booking Holdings, the world’s largest travel service platform that invested $180 million in Yanolja together with the Government of Singapore Investment Corp. (GIC) in June 2019, recorded its ownership of Yanolja shares at $122 million at the end of June this year, according to its annual regulatory 10-K filing made in the third quarter. The firm estimated its Yanolja holding at $306 million six months ago.

Non-unicorn startups but with solid growth are also seeing their worth nosedive.

Vendys, operator of local food coupon service app, had its enterprise value assessed at 54 billion won during a fundraising round in 2018. However, it sold its 88.8 percent stake to Hyundai Ezwel, a welfare service provider under Hyundai Department Group, at 37.1 billion won.

Investors are warned of possible misleading information about real valuations of startups. Limited data on unlisted firms’ actual business performance makes it even harder for ordinary investors to assess an investment decision.

Vident valued its 10.22 percent stake in Bithumb Korea, the operator of the country’s second largest crypto exchange Bithumb, at 140.1 billion won in the third quarter ended September this year, marginally down by 0.7 percent from its estimate made in the beginning of the year. However, Bithumb Korea shares are now trading at around 100,000 won, down sharply from 400,000 won traded in January.