Yanolja's ties with Citigroup could unnerve Morgan Stanley

Citigroup Center in New York is seen in this Feb. 23, 2009 file photo. AP-Yonhap

US firms may compete to handle Korean app operator's IPO

By Park Jae-hyuk

The strategic partnership signed between Yanolja and Citibank Korea last Friday has been seen by market insiders as Citigroup's initial effort to take part in the hotel booking app operator's listing on a foreign stock market.

This has also been regarded as a potential threat to Morgan Stanley, which has long been viewed as the strongest candidate to become a foreign underwriter for the Korean firm's planned initial public offering (IPO) overseas.

Both Yanolja and Citibank Korea explained that their latest partnership was merely intended to help the former expand its presence in the global market using Citigroup's worldwide network and to enable the bank to offer global payment services specialized for the hospitality industry.

Sources familiar with this issue, however, did not rule out the possibility of further cooperation for Yanolja's IPO in other countries, including the United States.

“Given that Citigroup has a wide network in the global market, it is reasonable enough to expect Yanolja to get advice from the banking giant on its listing overseas,” one source said on condition of anonymity.

A Citibank Korea spokesman, who is in charge of public relations of its investment banking affiliate, Citigroup Global Markets Korea Securities, remained cautious about the firm's possible collaboration with Yanolja for its IPO. He noted that the recent strategic deal was part of the bank's efforts to enhance its corporate banking on which its U.S. headquarters has focused, amid its planned exit from consumer banking operations in 13 markets.

After selecting Mirae Asset Securities as the lead underwriter and Samsung Securities as a co-underwriter last November, Yanolja has maintained that there is still room for it to select a single foreign brokerage as an additional underwriter for its dual listing in Korea and in another country. However, it declined to reveal the specific region.

Although some news outlets reported that the company is in talks with SoftBank Vision Fund to attract 1 trillion won in investments for its listing on the Nasdaq market, a Yanolja spokesman denied this.

“The only fact is that we have received offers from multiple foreign brokerages regarding our listing overseas,” he said.

A man enters a Morgan Stanley building in New York in this Dec. 19, 2007 file photo. AP-Yonhap

Morgan Stanley has been expected to team up with Yanolja sometime this year because it played a key role in helping the Korean firm attract a combined $180 million in investments in 2019 from Singaporean sovereign wealth fund GIC and Booking Holdings, a Nasdaq-listed U.S. travel service platform operator. This enabled Yanolja to become a unicorn startup with a valuation of over 1 trillion won ($1 billion), along with Coupang, Krafton and Viva Republica.

There were also rumors in March that the Korean lodging service platform provider was getting “unofficial advice” from the U.S. investment bank for its listing on the Nasdaq or the New York Stock Exchange.

However, signs of cracks in their relationship appeared earlier this month.

Morgan Stanley, the underwriter for Delivery Hero Korea's sale of Yogiyo, reportedly excluded Yanolja from the shortlist of potential buyers of the delivery app operator, after a preliminary bid on May 10. Although Yanolja's participation in the preliminary bidding had surprised market insiders, the seller shortlisted Shinsegae, MBK Partners, Affinity Equity Partners, Permira and Bain Capital for the final bidding.

If Citigroup gets involved in Yanolja's IPO, it may replace Morgan Stanley's previous position or the two U.S. investment banks could end up competing with each other to become the lead underwriter and earn more in commissions. Considering that Yanolja's valuation is estimated at up to 10 trillion won, an underwriter for its IPO is highly expected to make a handsome profit.