Coupang to seek new investors amid SoftBank's difficulties

SoftBank Group Chairman Masayoshi Son, left, shakes hands with Coupang founder and CEO Kim Bom in this 2018 file photo. / Yonhap

By Kim Jae-heun

The country's largest online retailer Coupang may seek new investors as its main one, SoftBank Vision Fund (SVF) led by Masayoshi Son, is floundering following the collapse of British satellite telecom company OneWeb and the coronavirus pandemic that continues to hurt Indian hotel chain startup Oyo.

According to a local securities firm analyst, it won't be difficult for Coupang to receive funding from different investors as it showed the possibility recently of improving its profitability.

The analyst also mentioned the possibility of the online retailer's initial public offering, but he said not to bet on SVF's exit from Coupang.

Coupang finally cut its decifit by 36.1 percent over the last year to record an operating loss of 720.5 billion won ($592.51 million). At the same time, it achieved its highest sales making 7.15 trillion won ($5.88 billion) in the same period, rising to the position of top player in online retailing.

Coupang's business has been a double-edged sword as its deficit grew with revenue. Nonetheless, the company didn't invest more in hiring more delivery drivers, instead building distribution centers to realize its vision for a nationwide overnight delivery service.

It was what Son wanted Coupang to do ― become a dominant market player and eliminate its competitors.

For this reason, Son has sought funds for Coupang on three separate occasions garnering $3 billion of investments in total, but these funds are expected to run out sometime this year.

Coupang said it is not in a critical status financially and has an 800 billion won cash flow so it is not urgent to seek further financing. However, it said it will not comment about possible contact with new investors or a plan to go public.

At this time, Son's SoftBank Group announced an operating loss of 15.24 trillion won ($12.53 billion) between April 2019 and March 2020 ― the largest amount in the company's history.

Compared to a 26.64 trillion won surplus recorded in the same period between 2018 and 2019, the level of performance deterioration appears critical.

SoftBank's net profit also went into deficit showing an 8.48 trillion won ($6.98 billion) loss from a 15.97 trillion won ($13.1 billion) surplus, which is the first time in 15 years for the Japanese conglomerate to record a net loss on a yearly basis.

The investment failure of SVF and the effects of COVID-19 are said to have caused the losses.

SVF alone recorded an operating loss 20.37 trillion won, following the sharp drop of Uber's stock price and failure of WeWork's initial public offering (IPO) on Nasdaq.

Son's venture capital fund's accumulated loss was recorded at 9.05 trillion won from the first to third quarter of last year, but the coronavirus pandemic has brought about an additional 11.31-trillion-won “deficit bomb.”

SVF invested $1 billion in OneWeb and $1.5 billion in Oyo. However, the satellite telecom company went bankrupt last month and the hotel chain startup has been struck hard by COVID-19, seeing a drastic fall in the number of hotel guests.

Son and SoftBank have stepped in to provide a countermeasure by selling 50.93 trillion won of holding assets to stabilize the company's financial status. Son also held 60 percent of SoftBank's stocks as security to maintain his $4 billion personal loan.

However, high-ranking executives in charge of SVF's management in North America have all resigned and the conglomerate's second-largest shareholder Elliott Management Corporation has requested boosting the firm's stock price.

Concerns abound that if the coronavirus outbreak prolongs, losses will be inflicted on firms funded by SVF.