Naver Corp. is considering taking over stakes in Kurly Inc. to become South Korea’s dawn delivery service market pioneer’s largest shareholder, a move expected to enhance the country’s information technology giant’s position in the fresh food shopping sector.
According to sources in the investment banking industry on Friday, Naver is exploring a chance to acquire about a 10% stake in Kurly from the latter’s existing shareholders.
The current largest shareholder of the premium grocery platform operator is Hong Kong-based Anchor Equity Partners (Anchor PE) with a 13.49% stake.
If Naver takes over a 10% stake from Anchor PE, it could become Kurly’s largest shareholder, outstripping a 5.69% stake held by Kurly’s founder and Chief Executive Officer Sophie Kim.
With its holdings in Kurly, Naver is expected to seek to reinforce its fresh food shopping business, industry observers said.
SHOPPING AS A NEW GROWTH DRIVER
E-commerce has emerged as a key growth driver for the Korean tech giant in recent years. Of Naver’s total revenue of 10.74 trillion won ($7.5 billion) in 2024, 2.92 trillion won, or 27.2%, was from its commerce business.
But it lags behind its crosstown marketplace rivals in the fresh produce shopping business.
Founded in 2014, Kurly garnered market attention with its early morning delivery service under the Market Kurly brand, which delivers fresh food to customers’ doors by 7 a.m. the next day if customers order before 11 p.m. the night before.
The platform, now simply Kurly, is considered the trailblazer of Korea’s dawn delivery service market, which has enabled consumers to receive fresh food, egg, or dairy products delivery within a few hours before morning without visiting brick-and-mortar grocery stores.
Despite its market sensation, the once-unicorn startup has remained in the red largely due to continued massive investment in facilities like fulfillment and logistics centers, as well as aggressive promotional campaigns amid fierce competition in the market.
It reported a consolidated operating loss of 18.3 billion won in 2024, narrowed from 143.6 billion won in the prior year.
It, however, swung to a profit of 13.7 billion won in earnings before interest, taxes, depreciation, and amortization (EBITDA), recording the first yearly profit since its inception.
RIGHT TIME TO BUY STAKES AT A LOW VALUATION
In recent years, Kurly’s valuation has been slashed sharply because of its delayed initial public offering on top of its slower-than-expected growth.
In 2022, Kurly got the preliminary nod from the Korea Exchange for its IPO but put off its listing in January 2023 after its valuation nosedived amid the languid stock market.
It has been looking to re-attempt the listing since early last year.
When it raised 120 billion won pre-IPO funding from Anchor PE and Aspex Management Ltd. in 2023, its enterprise value was estimated at 2.9 trillion won, sharply down from its peak valuation of up to 4 trillion won when it raised 250 billion won in 2021.
Last Thursday, Kurly announced a tender offer to buy back up to 1 million company shares at 15,000 won apiece in the over-the-counter market.
Based on the price, Kurly’s valuation is estimated at 633.5 billion won.
Its lowered valuation is deemed to be cheap enough to entice interest from Naver in buying the online grocer’s stake, said industry experts.
Once Naver acquires Kurly’s stake, the two companies are expected to seek to collaborate in online grocery.
Especially, Naver’s fresh food shopping business could gain impetus from the anticipated synergy from its cooperation with Kurly.
By Jong-Kwan Park
pjk@hankyung.com
Sookyung Seo edited this article.
