"Return the 10 Trillion Investment in SSG.com"... Shinsegae vs Private Equity Fund Dispute Ignites

Final Negotiations on 'Put Option' Exercise on Next Month 1st
Shinsegae "No Authority"... IF "Exercise Possible"

A private equity fund (PEF) that invested in SSG.com, the e-commerce subsidiary of Emart, is moving to early recover its investment of about 1 trillion won, drawing attention to the negotiation results between the two parties.

According to industry sources on the 29th, Emart and Shinsegae are in final negotiations with SSG.com's financial investors (FIs), Affinity Equity Partners and BRV Capital, over whether to exercise the put option (the right to sell shares at a specific price) after June 1. A Shinsegae Group official said, "We are conducting verification procedures according to the contract between the investors and shareholders and are engaged in mutual consultations."

Previously, SSG.com received investments totaling 1 trillion won from two private equity funds that signed investment agreements with Shinsegae Group: 700 billion won in 2019 and 300 billion won in 2022. Each of the two private equity funds holds a 15% stake in SSG.com.

The investment contract at the time included a put option agreement. It stipulated that if SSG.com failed to exceed a total transaction amount (GMV) of 5.16 trillion won by 2023 or did not receive an opinion from multiple investment banks (IBs) confirming readiness for an initial public offering (IPO), the FIs could demand that Shinsegae purchase all the shares they hold.

Shinsegae claims that the conditions have already been met and that the FIs have no right to exercise the put option. SSG.com's GMV already exceeded 5.16 trillion won as of last year, and the IPO process has advanced to the point where the lead underwriter has been selected.

On the other hand, the FIs counter that SSG.com inflated its GMV through gift certificate transactions and that they have not received a statement from the IBs confirming the feasibility of the IPO.

Industry insiders predict that the conflicting positions could lead to legal disputes. However, even if the court sides with the FIs, recovering the investment funds is expected to be difficult. In particular, Emart, the parent company of SSG.com, had borrowings amounting to 11.5 trillion won as of last year, with a debt ratio exceeding 140%. Its performance plummeted, recording its first operating loss since its founding last year.

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