[THE INVESTOR] E-commerce platform service provider Cafe24 is set to be the first venture firm to be listed in Korea under the so-called “Tesla standards,” which allows listing of promising companies that have not yet posted significant profits.
Korea Exchange, operator of the secondary bourse KOSDAQ, gave preliminary approval for Cafe24’s initial public offering on Dec. 1.
The Financial Services Commission had lowered the bar for unprofitable tech startups to go public if they hold promise in December 2016. The new regulations were dubbed “Tesla standards” after the iconic US electric carmaker that got listed on NASDAQ for its future potential.
A company with 50 billion won or more in market cap may be eligible to get listed this way if its latest annual revenue exceeds 3 billion won (US$2.76 million) and it has maintained an average revenue growth of 20 percent in the past two years.
Under these standards, IPO underwriters are obliged to buy back stocks. If the share price falls within three months of listing, the underwriters must buy back stocks at 90 percent of the offer price.
It is part of the country’s efforts to foster startups, by allowing a public listing and enabling investors to exit easier.
Founded in 1999, Cafe24 recorded 101.5 billion won in revenue and an operating loss of 2.5 billion won in 2016. But it turned to black in the first half of this year with a 1.6 billion won net profit. The company aims to raise 40 billion won from its IPO, with which it plans to to develop new businesses and upgrade services. It is expected to be listed in February.
By Park Ga-young (firstname.lastname@example.org)