Coupang’s high-profile New York initial public offering (IPO) is expected to raise up to $1 billion that will be used to cement the ecommerce firm’s South Korean dominance.

Coupang Inc, the parent company of South Korean subsidiary Coupang Corp, filed for an IPO with the U.S. Securities & Exchange Commission (SEC) on February 12. Its listing on the New York Stock Exchange is expected in the first half of the year.

As well as raising fresh funds, the listing will allow existing investors, including SoftBank Group, to exit, although Coupang has not yet disclosed how many shares it will sell. The issued common shares and redeemable convertible preferred shares amount to 114,566,705 and 1,372,898,443 respectively, according to the document.

Coupang is reportedly hoping for a market valuation of more than $50 billion, which, if achieved, would mark a significant jump from the 30 trillion won ($27.2 billion) valuation estimated only a month ago. Its revenue jumped 91% year-on-year to $11.97 billion in 2020, partly due to accelerated online sales during the Covid-19 pandemic. Coupang has also been expanding its service offerings based on its user base.

The company is said to be aiming to raise about $1 billion in the IPO, which would be the largest by a foreign company in the U.S. since Alibaba’s debut in 2014. Coupang’s dominant position in the South Korean ecommerce market, whose growth has accelerated since the pandemic began, could appeal to global investors.

Skewed voting power a disincentive

However, other factors could have a negative impact on the company’s value, industry watchers said. Coupang’s operations are concentrated in South Korea, where many listed companies suffer from undervaluation due to the so-called Korea discount, which reflects geopolitical risks related to North Korea. And although the company dominates the South Korean market, it still has a market share of less than 20% and faces fierce competition from rivals such as Naver and eBay.

Coupang’s adoption of a dual-class structure could be another factor that makes the company less attractive to institutional investors, which advocate a “one-share-one-vote” principle. Under this structure, Class A shares will be offered to the public and carry one vote, while Class B stock, with 29 votes per share, will only be available to Bom Suk Kim, Coupang’s founder and chief executive officer.

“Coupang clearly has an attractive business model but the voting power is overly skewed to Kim,” said a hedge fund manager in Seoul. “This, combined with the Korea discount, may reduce interest in the company.”

In the document filed with the SEC, Coupang said it would use net proceeds from the IPO for general corporate purposes and that some may also be used for acquisitions. Many expect the company to use the funds to expand its new businesses, such as food delivery service Coupang Eats and online video service Coupang Play.

With Kim viewing Amazon as the company’s role model, Coupang is expected to continue broadening its services and enter new regions, industry watchers said. (Reporting by Eun-jin Choi)

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