Following Coupang, Market Kurly and Dunamu Also Pursue New York Listings: "Why Did They Choose the US?"

Dunamu's Valuation Could Reach at Least $10 Billion in the US... Up to $100 Billion Compared to Coinbase
Market Kurly Considers US Listing Despite Losses... US Move Accelerated to Defend Management Rights

A Bitcoin price is displayed on the Upbit Lounge price ticker, a cryptocurrency exchange located in Gangnam-gu, Seoul. [Photo by Yonhap News]

[Asia Economy Reporter Lee Seon-ae] Following Coupang's successful listing on the New York Stock Exchange, domestic unicorn companies (unlisted companies valued at over 1 trillion KRW) are accelerating their moves to the United States. After Market Kurly, Dunamu, the operator of Upbit?the largest cryptocurrency exchange in Korea by trading volume?is also choosing to head to the U.S., drawing attention to the potential 'second Coupang' protagonist.

According to the investment banking (IB) industry on the 5th, Dunamu is actively holding meetings with global investment firms such as Goldman Sachs to pursue a listing on the New York Stock Exchange. An IB industry insider stated, "Dunamu considered listing on NASDAQ and via SPAC after domestic listing but withdrew those plans and ultimately decided on the New York Stock Exchange." He added, "The domestic market is tightening regulations on cryptocurrency exchanges, including amending and enforcing the Act on Reporting and Using Specified Financial Transaction Information (Special Financial Information Act) to require real-name verified virtual accounts through commercial banks, and it is difficult to receive sufficient corporate valuation, which is why they chose the New York Stock Exchange listing. Dunamu and its investors expect to be highly valued for their future potential."

The reason Dunamu chose the U.S. stock market is to receive a proper valuation of its corporate value. Currently, it is valued at around 1.5 trillion KRW in the domestic market. Its first-quarter revenue is estimated at 460 billion KRW, with operating profit around 420 billion KRW. Annual operating profit is expected to exceed 1 trillion KRW. The market's estimated net profit for Dunamu is conservatively around 500 billion KRW, and even applying only 20 times the price-earnings ratio (PER)?half the average PER of 40 times for platform sectors like Kakao and Naver?the corporate value would be 9.7 trillion KRW. However, in reality, listing domestically is difficult, and such a valuation is unattainable. Recently, financial authorities have strengthened regulations on domestic cryptocurrency exchanges by amending and enforcing the Special Financial Information Act. As a result, it is expected that about 100 exchanges operating domestically will be significantly consolidated around major exchanges. An investor said, "The likelihood of higher hurdles in the listing process led them to look to the U.S. market," adding, "Even if they list, conservative views on cryptocurrency exchanges mean they cannot receive a higher corporate valuation than in the U.S. market."

The market expects Dunamu to be valued at a minimum of 10 trillion KRW upon U.S. listing, but Dunamu's investors are confident that 100 trillion KRW is entirely possible. This expectation is based on the corporate value of Coinbase, the No. 1 U.S. cryptocurrency exchange planning to list on NASDAQ. Coinbase posted an operating profit of 464 billion KRW in 2020 and was valued at 100 trillion KRW. Dunamu's operating profit in the first quarter alone is estimated to have exceeded 410 billion KRW, fueling hopes for a 100 trillion KRW valuation.

Although loss-making Coupang found it difficult to receive corporate valuation domestically, it is currently recognized at 80 to 100 trillion KRW in the U.S. market, thanks to an environment that acknowledges growth potential. Lee Sang-min, senior researcher at the Nara Salim Research Institute, said, "Korea mainly looks at past performance, but the U.S. places higher value on future growth potential," adding, "Because of market trust in transparency, the future can be actively forecasted."

Without market transparency and trust, focus inevitably falls on past performance. Coupang posted an operating loss exceeding 1 trillion KRW in 2018 and a loss of 580 billion KRW in 2020, yet it boldly entered the U.S. stock market as the largest foreign company since Alibaba in 2014. Market Kurly, observing this, did not even consider domestic listing due to its deficits and immediately turned its eyes to the U.S.

Biotech companies also cite corporate valuation as the reason for pursuing U.S. listings. Currently, Genexine, SCM Lifescience's Coimmune, and ABProBio's ABPro are reportedly pursuing NASDAQ listings. An accounting firm official said, "NASDAQ's listing requirements are more flexible than domestic ones," adding, "Even if sales and profit requirements are not met, companies can list if future growth potential is recognized, which is why biotech companies with almost no sales are heading to the U.S."

The presence of management control defense mechanisms such as dual-class voting rights in the U.S. is another factor driving companies to choose the U.S. Dual-class voting rights grant certain shares significantly more voting power, used as a means to strengthen control by some shareholders. In Korea, one share equals one vote as a principle, and such mechanisms are not permitted.

Kim Beom-seok, chairman of Coupang's board, was granted 100% of Class B common shares with 29 votes per share through this listing. Although he holds no Class A common shares, he controls 76.2% of voting rights (reflecting recent share sales) via Class B shares. It is argued that if Coupang had listed domestically, management control defense would not have been possible. The background for U.S. listing attempts by Market Kurly and Dunamu also includes dual-class voting rights. Market Kurly's founder Kim Seul-ah holds only 10.7% of shares (as of the end of 2019), making management control difficult if listed domestically. Dunamu's chairman Song Chi-hyung holds 26.8%, which is not considered absolutely stable when accounting for dilution upon listing.

The Korea Listed Companies Association stated, "The listing of unicorn companies is an indicator of a country's capital market level and scale and a factor determining tax revenue, so the overseas listing of unicorn companies like Coupang is a national loss," adding, "To respond to capital market globalization, a dual-class voting rights system aligned with global standards must be introduced." According to the Korea Listed Companies Association, countries that have adopted dual-class voting rights include the U.S., Japan, Singapore, and Hong Kong.

This content was produced with the assistance of AI translation services.