Korean grocery delivery platform Oasis to buy e-commerce 11Street

South Korean grocery delivery platform Oasis Corp. is poised to acquire the country’s leading e-commerce operator 11Street Co. to ramp up its business amid rapid growth of Chinese players such as AliExpress and Temu in Korea, the world’s fifth-largest online shopping market.

Seoul-based Nile Holdings Consortium, 11Street’s financial investor, has received Oasis’ letter of intent (LOI) to buy the e-commerce operator and is reviewing the divestment procedures, banking industry insiders said on Wednesday.

It is highly likely that 11Street’s top shareholder SK Square Co. and second-largest Nile Holdings will push swapping a 100% stake in the e-commerce operator with around 25% of Oasis and some shares in Route, Oasis’ logistics tech arm, added the banking sources.

Oasis, which dropped its initial public offering plan last year amid investors’ tepid interest in online shopping apps, is forecast to be valued at 1.5 trillion won ($1.1 billion) in the IPO. 11Street, an affiliate of Korea’s No. 2 conglomerate SK Group, is valued at more than 500 billion won.

If the deal is clinched, Oasis will increase its customer base and directly deliver Korean groceries to overseas markets through the existing partnership between global retail giant Amazon.com Inc. and 11Street.

Oasis’ acquisition of 11Street will be a game-changer for the Korean e-commerce industry as the grocery delivery platform will expand to international shopping and delivery services with a broader range of products.

KEY PLAYER IN FIFTH-LARGEST ECOMMERCE MARKET

Korea was the world's No. 5 e-commerce market with 228.9 trillion won last year, following the global top China, the US, the UK and Japan, according to business lobby group The Federation of Korean Industries (FKI) report in June.

11Street was the third-largest e-commerce platform in Korea in May by the number of monthly active users (MAUs). Coupang Inc. topped and China’s AliExpress and Temu ranked second and fourth, respectively.

The SK Group affiliate logged a 125.8 billion won operating loss last year, marking a deficit for the third straight year. Its revenue reached 865.5 billion won last year, up 9.7% on-year.

SK Square, SK Group’s investment arm, holds an 80.26% stake in 11Street while Nile Holdings owns 18.19%.

INVESTORS TO EXIT

Nile Holdings invested 500 billion won in 11Street in 2018, with 350 billion won from National Pension Service (NPS), 100 billion won from Seoul-based H&Q Korea Partners and Hong Kong-based Aeneas Private Equity and 50 billion won from the Korean Federation of Community Credit Cooperatives (KFCC).

H&Q and Aeneas, which manage Nile Holdings, put 11Street on the market in January as Singapore-based e-commerce giant Qoo10 Pte. walked away from the acquisition of the Korean e-commerce platform last November. 

Oasis, a 13-year-old unicorn, posted 13.3 billion won in operating profit and 475.4 billion won in revenue last year, up 177% and 11.3% on-year, respectively.

If Oasis closes the deal, the investors of Nile Holdings are expected to recoup their investment when the grocery delivery platform goes public.

Oasis has included drag-along rights in the LOI, which allows the Nile Holdings shareholders to sell their stake together if Oasis’ IPO price is below its target, according to industry insiders.

Write to Ye-Jin Jun at ace@hankyung.com

Jihyun Kim edited this article.