Coupang cuts driver fees ahead of $2.8 billion IPO

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Coupang cuts driver fees ahead of $2.8 billion IPO

Published: 02 Mar. 2021, 17:21 Updated: 02 Mar. 2021, 18:23

Delivery riders on a street in Seoul on Tuesday. [NEWS1]

Coupang is set to raise about $2.8 billion in its planned initial public offering (IPO) on New York Stock Exchange, according to an S-1A filed with the Securities and Exchange Commission.

The monster IPO, which could make the founder a billionaire, comes just as the company cuts fees paid to some of its drivers by almost 20 percent.

In the filing, the company said it will be selling 100 million shares and its shareholders will be selling 20 million shares priced in a range between $27 and $30.

Coupang, which has never made money, could be worth $50 billion upon listing, up from a valuation of under $10 billion in 2018.

SoftBank Vision Fund, BlackRock, the world’s largest asset manager, and Sequoia Capital would be beneficiaries of a strong IPO.

SoftBank, which invested $1 billion in Coupang in 2015 and an additional $2 billion in 2018 through its Vision Fund, will own more than a third of the company’s Class A shares.

Kim Bom-suk, who is CEO of the Delaware-incorporated company, will hold around 76.7 percent of the voting power due to special voting rights that gives each of his shares 29 votes.

He will “have the ability to control the outcome of matters submitted to our stockholders for approval, including the election of our directors and the approval of any change in control transaction,” according to the filing.

Special classes of shares are unpopular with some institutional investors and can result in exclusion from major indexes.

Ahead of its offering, company has been in conflict with delivery drivers from Coupang Eats, its food delivery platform.

Starting Tuesday, Coupang Eats lowered the basic delivery fee by 19 percent from 3,100 won ($2.8) per delivery to 2,500 won. Badeal Minjok, the largest food delivery app in Korea, offers 3,000 won while Yogiyo pays 3,500 won.

Some delivery riders responded by refusing to deliver food from Coupang Eats on Tuesday, calling it a “Coupang Eats Logout Day.”

The reduced delivery fee could lower a delivery rider’s monthly payment by around 200,000 won, assuming they make 10 deliveries a day, just as many people are struggling to make ends meet during the pandemic.

Unlike other food apps, Coupang Eats only allows drivers to deliver to one household at a time. They can accept another order once the delivery is complete. This may shorten the time it takes for customers to receive food, but it reduces the number of orders a delivery worker can process in a day.

Delivery riders say they are afraid the reduced rate from Coupang Eats will result in a reduction by other food delivery platforms.

BY JIN MIN-JI [jin.minji@joongang.co.kr]