April 24, 2024

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Following the financial regulator’s recommendations to improve financial soundness, South Korea’s e-commerce platform Coupang increased its capital base.

The company raised its capital by an estimated 155 billion won (US$129 million) on Sept. 24, the second capital increase this year. In June, the company added 500 billion won to its capital. 

The financial regulators on Sept. 9 recommended a capital increase citing inadequate levels held by the loss-making e-commerce giant.

Coupang raised capital twice last year after receiving 2 trillion won in investment from SoftBank’s Vision Fund.

Coupang is expected to continue its aggressive expansion for its food delivery business and logistics infrastructure. The company doubled its logistics center to 24 by the end of last year and is currently running a test version of food delivery service Coupang Eats to vie with Baedal Minjok and Yogiyo.

The Financial Supervisory Service, the country’s financial watchdog, is paying close attention to the fast-growing company, dubbed South Korean’s answer to Amazon.com, as its losses pile up with vigorous investments. The company’s revenue reached 4.4 trillion won last year, up 348 billion won in 2014. But its losses also ballooned from 120 billion won in 2014 to more than 1 trillion won last year.

As a nonfinancial company, Coupang has to keep the total debt-equity ratio below 200 percent and as an electronic money and prepaid electronic payment service provider, it has to maintain a ratio of capital to unpaid balance above 20 percent.

The company submitted a management improvement plan including a capital increase to the FSS in 2017 when its capital fell to negative 244.4 billion won.

By Park Ga-young (gypark@heraldcorp.com)