Travel platform Yanolja eyes US IPO in dual listing

South Korea’s largest travel platform Yanolja has begun the internal process to list in both the US and South Korea, by which the company expects to more than double its estimated enterprise value to over 10 trillion won ($9 billion).

Morgan Stanley is now informally advising Yanolja on its US IPO, according to investment banking sources on Mar. 22. The US investment bank was on the shortlist of Yanolja's IPO managers last year.

In November 2020, Yanolja mandated Mirae Asset Daewoo Co. and Samsung Securities Co. to handle its Korean IPO and planned to apply for a domestic listing in the first half of this year. Singapore's GIC and the US online travel agency Booking Holdings Inc. hold a combined 35-40% stake in the travel app.

But it changed tack after Coupang Corp.'s spectacular US trading debut this month, which valued the country's No. 2 e-commerce company at $77 billion, much higher than South Korea's dominant online platform Naver Corp.

"We received several proposals for an overseas IPO from multiple global brokerage companies," said a Yanolja spokesman. "We are seriously considering listing either on the Nasdaq or the New York Stock Exchange."

It will soon add foreign brokerage houses to the roster of its IPO underwriters, according to the sources.

WHY THE US?

Behind Yanolja's switch to dual listing was its conclusion that a domestic IPO may not draw as high a valuation as it is aiming for.

The value of its booking transactions has reached 2 trillion won a year, with 2 million monthly active users. It also boasts of the world's No. 2 hotel property management system, with annual sales of over 300 billion won. 

But its IPO underwriters pointed out the possibility that it might not qualify for a listing on South Korea's main bourse due to consecutive years of operating losses, despite swinging to a profit, based on EBITDA, last year.

The travel app may go to the junior Kosdaq market that applies loosened IPO requirements, so-called "Tesla rules," to allow loss-making startups to go public in certain circumstances. But the Tesla rules-applied IPOs may not be priced as high as the companies want because of putback options, under which their IPO underwriters are required to buy the shares back at far above the market price, if the stock falls sharply.

Its financial investors, including Seoul-based SkyLake Investment, are understood to have pressed the company to list in the US to achieve a higher valuation. 

Yanolja's financial investors
Investor	Investment amount (year)
SkyLake Investment	*60 billion won (2017)
GIC and Booking Holdings	$180 million (2019)
Note: *A condition was attached that Yanolja must complete the IPO by 2022. Converted into $53 million as of Mar. 22, 2021

VALUATION VS AIRBNB

Korean brokerage firms value Yanolja at 3 trillion to 4 trillion won, sharply above the 1 trillion won estimated when GIC and Booking Holdings invested $180 million in 2019. 

But Yanolja expects its enterprise value to exceed 10 trillion won once it lists in the US, or one-tenth Airbnb's market capitalization of 131 trillion won. Yanolja's sales represent one-tenth of the US vacation home rental company's sales.

To speed up its IPO preparation, the company hired Choi Chan-seok, ex-head of investment at the Korean mobile game company Netmarble, as chief investment officer last month. Its Chief Business Officer Kim Jong-yoon, a former McKinsey consultant, is also working on the IPO with founder and CEO Lee Sujin.

If it pushes ahead with a dual listing, its IPO would be delayed to either later this year or early next year.

Analysts had projected that if listed on the Nasdaq, Yanolja’s enterprise value could rise to at least $11 billion.

"There is no precedent for a Korean unicorn company to list at a valuation in the 10 trillion won range, so a number of Korean companies began to look abroad for a US listing," said one of the IB sources. "But it remains uncertain whether Yanolja will be taken as a Korean Airbnb and win a valuation in the several trillion won range like Coupang."

Founded in 2005, Yanolja narrowed its operating loss to 10.1 billion won in 2019 from a 6.8 billion won shortfall in 2018. Its sales more than quadrupled to 245 billion won between 2017 and 2019.

The company acquired Southeast Asia's No. 1 hotel chain ZENRooms in 2018 and India-based eZee Technosys, the world’s No. 2 hotel housekeeping service provider, in 2019. Now the Korean startup is aiming to transform into a software company with a diversified portfolio ranging from accommodations to transport ticketing and leisure activities.

On a popular over-the-counter stock market, Yanolja shares have skyrocketed almost 300% year to date in anticipation of its IPO.

Meanwhile, Market Kurly, a premium grocery delivery startup in Korea, is also looking to list in the US, following in the footsteps of Coupang.

Write to Ye-Jin Jeon at ace@hankyung.com
Yeonhee Kim edited this article.