Socar to weather the storm and push ahead with IPO

Socar CEO Jake Park talks about the company's goals during a press conference Wednesday at the Conrad Seoul in southern Seoul. [SOCAR]

Socar will push ahead with its initial public offering (IPO), despite the unfavorable market conditions that forced many big names to cancel their plans to go public.

“The market situation isn't great, but the mobility industry is a fast-changing industry,” Socar CEO Jake Park said during a press conference Wednesday. “We have many plans after our IPO such as mergers and new businesses, so we thought going public now is a better choice than waiting for the perfect time.”

Socar aims to go public on the Kospi later this month, the country’s first car-sharing company to do so. It plans to sell 4,550,000 shares at between 34,000 won ($26) and 45,000 won each. If the upper end of the range is hit, 204.8 billion won of stocks will be sold.

Sixty percent of the raised funds will be put toward mergers and acquisitions, Park said, while 20 percent will go toward expanding its business areas. The remainder will go toward the development of new technology.

Socar will also release its so-called super app within the year, which will offer electric bicycle and parking services in addition to its existing car-sharing services.

“We will grow as a mobility platform to include all kinds of transportation,” Park said. “The new businesses will focus on autonomous vehicles and electric bicycles.”

Established in 2011, Socar first started its car-sharing service in Jeju with only 100 vehicles and some 30 users. The number of cars it operates is now in the 18,000s, with its users soaring to 7 million.

It now dominates the market with an 80 percent share, the company said.

When asked about concerns regarding the valuation issue, Park said “it rather has been undervalued.”

Socar compared itself to various foreign companies like Uber and Lyft when deciding its price band, not local car rental companies that offer similar services, raising peoples' concerns of overvaluations.

“Lotte Rental invested in us, which means that the rental company acknowledged the difference in business from what they do to what we do,” Park said. “Our existing shareholders promised to not sell off their shares after the IPO for a certain period of time.”

Soqri is the largest shareholder of Socar with 21.4 percent. Soqri is an investment company 100 percent owned by Socar founder Lee Jae-woong. SK owns 20.2 percent while Lotte Rental has 13.3 percent.

Socar was prepared to go public early this month, but the plan was delayed slightly as the company wanted to wait to announce its second quarter earnings before the IPO. It reported 91.1 billion won in revenue and 1.4 billion won in operating profit.

Two-day book building for institutions will start Thursday, while public subscription is scheduled for Aug. 10 and 11.

Mirae Asset Securities is the main underwriter for the IPO.

Only two companies are expected to go public in August, compared to 14 in the same month last year. Many big names like Hyundai Oilbank, One Store, SK Shieldus and CJ Olive Young have canceled or halted plans to do so, citing the market condition.

BY SARAH CHEA [chea.sarah@joongang.co.kr]