Lee Yeon-woo is a financial journalist at The Korea Times. Her wide range of reporting includes policies, macroeconomics, stock market, companies and even crypto. She is passionate about connecting the dots in Korean finance and making it easier for foreign nationals to understand. Based on her previous experience as a national reporter, she also has a keen interest in social issues within the sector, including gender equality and ESG. Your tips and insights are always appreciated. You can send them to yanu@koreatimes.co.kr.
11Street up for sale again as SK Square forfeits call option
Logo of 11Street / Courtesy of 11Street
By Lee Yeon-woo
The e-commerce platform 11Street, grappling with a financial crisis, is expected to expedite its forced sale process, as its largest shareholder SK Square has relinquished its call option.
According to industry sources, Tuesday, Nile Holdings Consortium, a financial investor of 11Street, has appointed Citi Global Market Securities and Samjong KPMG as the main organizers for the sale of the e-commerce company. The consortium includes the National Pension Service, MG Community Credit Cooperatives and H&Q Korea.
In 2018, SK Square raised 500 billion won ($379 million) from the consortium, with a commitment to repay this investment through an initial public offering (IPO) of 11Street by last September. However, SK Square failed to meet this commitment and opted not to exercise the call option, which obligated it to repurchase the consortium's stakes. Consequently, the consortium exercised its drag-along rights, enabling its members to compel SK Square to join in selling their stakes.
A critical point to note is the significant decrease in 11Street's anticipated sale price. In 2018, the company was appraised at 2.75 trillion won, but the current expected sale price is around 600 billion won. This figure is in line with the initial investment of 500 billion won, plus an annual guaranteed return of 3.5 percent.
Should the sale succeed, the consortium is positioned to be the first to recoup its investment. For SK Square, this scenario would result in profit margins close to zero percent.
Over the past year, SK Square has engaged in a series of negotiations to sell 11Street, all of which have ultimately failed. With the sales price now significantly reduced, there is growing interest in whether former prospective buyers, such as Alibaba and Qoo10, will renew their interest in acquiring the firm.