THE KOREA ECONOMIC DAILY, GLOBAL EDITION

Financial investors of Qxpress Pte. are set to take over Singapore-based Qoo10 Pte. and its founder Ku Young Bae’s control amid financial turmoil of the e-commerce platform’s South Korean units and plans to sell the logistics company instead of seeking a Nasdaq listing.

Private equity firms, which invested in Qxpress, plan to convert their preferred shares, convertible bonds and exchangeable debts into ordinary stocks and become the largest shareholders, investment banking industry sources in Seoul said on Thursday.

Seoul-based Crescendo Equity Partners Ltd., Corstone Asia Co., Metistone Equity Partners Co., Cactus Private Equity and Korea Development Bank Private Equity invested a total of some 170 billion won ($123.5 million) in Qxpress’ preferred shares, convertible notes and exchangeable bonds from 2019 to 2021.

Those financial investors are expected to secure a combined stake of more than 50% in Qxpress once they convert those securities into ordinary stocks. Currently, Ku and Qoo10 together hold a 95.2% stake in the logistics unit, according to the sources.

The move came as TMON Inc. and WeMakePrice Co. – the South Korean e-commerce platforms owned by Qoo10 – filed for court receivership after weeks of payment delays to vendors in a sign of the financial turmoil extending to the parent company.

Ku vowed to solve the liquidity crisis by selling his stake in Qxpress, which had planned an initial public offering on the Nasdaq.

TO SELL RATHER THAN SEEK NASDAQ IPO

Those private equity firms are seeking to take over Ku’s control over Qxpress to prevent Qoo10’s troubles from damaging the logistics unit’s corporate value and normalize its management to sell the company rather than listing on the Nasdaq, industry sources said.

The investors predicted Qxpress to survive independently despite the financial crunches as the company generated only 30% of sales from Qoo10 and its subsidiaries, according to the sources.

Considering such expectations, the private equity firms may have decided to exercise their options to convert Qxpress’ preferred shares, convertible notes and exchangeable bonds to ordinary shares amid the crisis of TMON and WeMakePrice, the sources said.

“Financial investors usually add a clause, which allows them to exercise conversion rights in case of an affiliate revival, a serious negligence of CEO or urgent management crisis in preparation for worst-cases when they sign an investment deal,” said an investment banking industry source in Seoul. “The troubles of TMON and WeMakePrice may have caused those investors to exercise the options.”

Crescendo bought 60 billion won in Qxpress’ preferred stocks in 2019, while Corstone and Metistone invested 30 billion won and 20 billion won, respectively in the company’s exchangeable bonds in 2021. Cactus Private Equity and Korea Development Bank Private Equity purchased 50 billion won in its convertible bonds.

Crescendo is expected to secure a 34.2% stake in Qxpress once it converts the preferred shares to ordinary stocks, cutting Ku and Qoo10’s stake to 62.6%. Their holdings are likely to fall below 50% once other private equity firms join the move.

That could jeopardize Ku’s plan to settle delayed payments to vendors of TMON and WeMakePrice, sources said.

TO SELL KOREAN UNITS

Qoo10 is considering selling its troubled South Korean units to solve the liquidity crisis.

WeMakePrice reportedly planned to suggest a buyout to Chinese e-commerce giants such as AliExpress and Temu, which are rapidly expanding their market shares in South Korea. Interpark Commerce Corp. acquired by Qoo10 2023 is also seeking a buyer.

Interest in their acquisition is expected to be low given the unlikelihood of their revival as e-commerce platforms due to the exodus of vendors and customers and heavy debts.

TMON’s debts exceeded its capital by 638.6 billion won as of 2022, while WeMakePrice’s debts topped its capital by 238.9 billion won as of 2023.

Interpark Commerce’s debt-to-equity ratio stood at nearly 90% with its debts totaling 99.3 billion won out of capital of 115.2 billion won.

Write to Ji-Eun Ha and Ji-Yoon Yang at hazzys@hankyung.com
 
Jongwoo Cheon edited this article.