Yanolja open to working with Morgan Stanley for IPO

A man enters the Morgan Stanley building in New York in this 2007 file photo. / AP-Yonhap

Hotel booking app operator leaves 'room' for US investment bank

By Park Jae-hyuk

Morgan Stanley is viewed as a potential underwriter for Yanolja's planned initial public offering (IPO) next year, after the travel and lodgings service platform provider hinted it may select another underwriter in addition to Mirae Asset Daewoo and Samsung Securities.

“Because we are also doing business overseas, there is still room for us to select a single foreign brokerage as an additional IPO underwriter,” a Yanolja official said without revealing the specifics of the company's plans.

In the hotel booking app operator's previous bid, Morgan Stanley and several other foreign and domestic brokerages, including Mirae Asset Daewoo, Samsung Securities, NH Investment & Securities and Daishin Securities, sought to be chosen as the underwriter.

Yanolja selected Mirae Asset Daewoo as the lead underwriter and Samsung Securities as a co-underwriter but neglected to include a foreign firm.

The decision came as a surprise to industry insiders because Morgan Stanley had played a key role in helping Yanolja to attract a combined $180 million in investments last year from Singaporean sovereign wealth fund GIC and Booking Holdings, a Nasdaq-listed American travel service platform operator. This enabled Yanolja to become a unicorn startup with a valuation over 1 trillion won ($1 billion), along with Coupang, Krafton and Viva Republica.

Market observers expect Yanolja to team up with Morgan Stanley sometime next year, despite its exclusion of the U.S. investment bank at this moment, taking into account the market uncertainties caused by the COVID-19 pandemic. Morgan Stanley was the only foreign company that was shortlisted to become an underwriter, sources said.

If Morgan Stanley collaborates with Yanolja, the investment bank will try to entice more foreign investment, so that the Korean company's valuation can reach 2 trillion won, the firm's desired level.

As Yanolja has been exploring opportunities to expand its product pipeline outside the Korean Peninsula, such a move would be a plus factor for Morgan Stanley. Since 2018, the Korean firm has expanded its overseas connections by working together with online travel agencies such as China's Ctrip, Japan's Rakuten and Singapore's Agoda.

“Depending on the growth of our overseas businesses, we are still considering listing our Singaporean subsidiary,” the Yanolja official said. “We have yet to choose the country to list our foreign subsidiary, but we are thinking of choosing the market that recognizes us.”

This is not the first time for Yanolja to push for an IPO. It also sought to go public back in 2018. At that time, Mirae Asset Daewoo and Daishin Securities served as the lead underwriters.

Following the growth of its valuation after successfully attracting foreign investments, Yanolja decided to pursue its stock market listing from scratch. Its planned IPO is also necessary for shareholders who need to retrieve their investments.

The largest shareholder of the company is its CEO Lee Su-jin and an affiliated person, with a combined 41.6 percent stake. KT, GIC, Booking Holdings, SkyLake Investment, Aju IB Investment, SBI Investment Korea and Hanwha Asset Management also collectively hold about 40 percent.

If Yanolja successfully goes public next year, it will be the nation's first unicorn startup listed on the stock market, so the outcome can be a yardstick for other local startups considering IPOs. Its success will also prove that Yanolja can grow into a global platform, overcoming the prejudice that its app is just used to look for “love motels.”

“Our planned IPO is an important step for us to evolve into the operator of a global hospitality solution and leisure super app, so we will prepare for this steadily,” the company said in its press release. “We will contribute to the development of the industry through a leap forward, becoming a leading global company and achieving successful digitization.”