South Korea’s largest parking service provider Parking Cloud is seeking to raise external funds with financial investors and strategic investors paying keen attention to the company.
Parking Cloud is sending teaser memorandums (TMs) to domestic and foreign potential buyers via a foreign investment bank, according to industry sources on June 26. Domestic major strategic investors and foreign private equity firms have received TMs. The company is planning to issue new shares worth 50 billion won ($41.7 million) and inject the proceeds into the company. The enterprise value is estimated at around 300 billion won.
Parking Cloud is likely to emphasise strengths such as its distinctive business model and market dominance to prospective buyers. Parking Cloud is reportedly aiming to exceed its break-even point by 2021.
Parking Cloud is an operator of a parking space reservation and payment app called iParking. It is currently operating iParking zones nationwide. This is through a long-term contract with building owners that have demands for parking lot management, except for 200 that are run directly by the company. Parking Cloud’s business set-up, dubbed the parking service model, receives commissions from building owners by providing parking space management services.
Its business model contrasts with the property model in which companies generate revenue from operating parking lots. They lease parking lots from building owners and offer services directly to customers. Parking Cloud’s competitors including HiParking and AJ Park have such a business model.
Parking Cloud’s unique business model has enabled the company to increase the number of its iParking zones rapidly and reduce various expenses. The company has built its reputation by expanding its iParking zone services to large building complexes like IFC Mall in Yeouido, E-mart stores and Times Square mall.
Parking Cloud is reportedly emphasizing the fact that parking lot management costs have decreased by 16% on average and revenue has increased by 30%. The company has adopted an unmanned system, with workers at Parking Cloud’s headquarters monitoring parking lots across the country.
“Parking Cloud is growing more rapidly compared to its rivals as it provides parking lot management services and receives commission whereas its competitors directly lease parking spaces,” said an industry source. “The company plans to increase the number of iParking zones to more than 10,000 by 2022.”
Parking Cloud is operating 2775 iParking zones nationwide, nine times HiParking’s 300 parking lots. Parking Cloud’s dominance in the parking lot industry is likely to attract investors. Strategic investors will be able to carry out add-one strategies by using iParking zones for services like electric vehicle charging, car maintenance and repair, car sharing and car washing. Financial investors may try to consolidate the industry, considering Parking Cloud is the largest company in the country.
Parking Cloud is currently renting out spaces to car sharing companies like SoCar and Green Car to generate extra revenue. The company is selling its big data accumulated from its parking lots to other mobility companies. Parking Cloud has also reportedly generated additional revenue from its valet parking service. It has recently adopted Hyundai Motor’s in-car payment system CarPay. (Reporting by Ik-hwan Choi)