Korea’s fashion unicorn Musinsa’s value grows to $2.8 bn with latest fundraising

[Courtesy of Musinsa]

Musinsa, South Korea’s No. 1 fashion platform, has emerged as a unicorn company with a corporate value in the range of 3.5 trillion won ($2.76 billion) after securing an investment worth 200 billion won from a global private equity fund (PEF). It is the first fashion platform to be valued at more than 3 trillion won in Korea.

Global PEF Kohlberg Kravis Roberts & Co. (KKR) and Wellington Management Co., one of the top three global asset management firms, agreed to invest a total of 200 billion won in Musinsa, according to multiple sources from the investment banking and fashion industries.

Musinsa was valued in the mid-3 trillion won range, somewhat lower than the 4 trillion won projected by the industry at the beginning of the year. However, analysts note that such a large-scale investment by global PEFs in the midst of a recession and global investment market chill is a testament to the company’s growth potential.

The investment, made part of Musinsa’s Series C funding, was led by KKR and joined by Wellington Management, according to sources. Wellington Management has resumed investing in Korea’s non-listed companies after a 10-year hiatus following its investment in Coupang Inc. in 2014.

Once this Series C funding round ends, Musinsa will have gained more than 430 billion won in funds. In 2019, the company received about 100 billion won from global venture capital Sequoia Capital LLP and then another 130 billion won from Sequoia Capital and IMM Investment Corp. in 2021, when it was valued at 2.5 trillion won. The company’s valuation has risen by more than 1 trillion won in about two years. “The fact that Musinsa has achieved steady and high growth every year along with small and medium-sized domestic brands, as well as trust in its management team equipped with quick decision-making and execution capabilities, positively influenced the investment decision,” said an IB industry official.

In fact, Musinsa has constantly remained profitable, unlike many e-commerce companies that are facing large losses. Last year, the platform’s sales grew 54 percent year on year to 708.3 billion won. Operating profit was 3.2 billion won, down sharply from 58.5 billion won in 2021. Yet, this year’s operating profit is expected to improve on higher profitability of subsidiaries and lower one-time costs.

The company’s gross merchandise value (GMV) is also growing rapidly. The GMV surpassed the 1 trillion won mark in 2020 with 1.2 trillion won and jumped to 2.3 trillion won in 2021, up 90 percent from a year ago. It then surged to over 3 trillion won last year, with the industry estimating last year’s GMV at 3.4 trillion won. This year, it is expected to exceed 4 trillion won.

Musinsa plans to use the invested funds to expand its business overseas, including the U.S. and Japan, and to pursue additional mergers and acquisitions. Attracting investment from a global PEF instead of a domestic PEF is also part of the company’s strategy to build partnership to facilitate its advances into overseas markets.

Musinsa is operating services in 13 countries, including the U.S., Japan, and Singapore. The company has been particularly focusing on the Japanese market, establishing Musinsa Japan in 2021 and recently opening a pop-up store in Tokyo.