News that the South Korean E-commerce company, Coupang filed for an initial public offering (IPO) at the New York Stock Exchange on February 12 (local time) has drawn attention to why the company chose to go public in the U.S. and not in South Korea. Industry insiders believe the company founder and chairman of the board, Kim Beom-seok (Kim Bom) and overseas investors like Son Jeong-eui (Masayoshi Son), chairman of SoftBank, consistently sought an IPO in the U.S. They also mentioned that the U.S. stock exchange would be better than the South Korean market for the company to avoid controversy due to accumulating operating losses while drawing massive investments and receiving dual-class voting rights.

According to the distribution and securities industries on February 14, Coupang had prepared a U.S. IPO since the company launched in 2010. Chairman Kim Beom-seok had announced plans of a U.S. IPO since an event celebrating the one-year anniversary of the company’s founding in 2011. In other words, the company did not change direction after trying to go public in the South Korean stock exchange, but had initially set its mind on a U.S. IPO.

This is in line with how Coupang had based the corporation in the U.S. and sought most of its investments from global funds. Vision Fund, which invested the most amount of money in Coupang, is expected to have 35-40% of the company’s shares one’s it is listed in the market. Vision Fund was created by the Public Investment Fund (PIF)--the sovereign wealth fund of Saudi Arabia--and Son’s Softbank, which provided 45% and 28% of the fund respectively. The industry believes Son, who has gained big profits with U.S. IPOs on numerous occasions, was probably the one who strongly promoted the latest IPO in the U.S.

Coupang has suffered hundreds of billions of won in operating losses every year, and the accumulated losses have exceeded 4 trillion won, which could have been another factor in the latest move. Even if the company wanted to go public in the Korean stock market, could the market accept the losses of Coupang? The KOSPI market allows companies in the red to file for an IPO, if they have a high potential for future growth. But since the listing of Samsung Biologics in 2016, there has been a heated debate on whether company valuations were properly assessed. Companies experiencing a deficit for four consecutive years are designated as administrative issues in KOSDAQ.

However, the U.S. stock market experienced big profits when the U.S. company Amazon and the Chinese E-commerce firm Alibaba dominated the market, so the present operating losses don’t seem to be such a big problem. An industry insider said, “Coupang’s sales in the past two years have grown significantly, and last year’s operating losses decreased, so the company probably thought that now was a good time for Coupang to be valued highly.”

The U.S. market attracts capital from all over the world, so it is also a good place to attract investments on a massive scale. According to the Wall Street Journal, which covered Coupang’s efforts for a U.S. IPO on February 12, Coupang’s filing for a U.S. IPO “is expected to be the largest from a foreign company since Alibaba Group Holding Ltd.’s blockbuster 2014 debut.” The U.S. newspaper also expected the offering “to garner a valuation exceeding $50 billion” (approximately 55.4 trillion won). In an article published last month, Bloomberg expected Coupang’s valuation to exceed $30 billion.

If Coupang is listed in the New York Stock Exchange, the company’s chairman Kim Beom-seok will have dual-class voting rights, putting him in a better position to defend his management rights. There are ten classes of Coupang shares--from A to J--and the Class B common stocks, which only Kim owns, gives him 29 votes per share. So he can exercise the majority of the voting rights with only a small portion of the shares.