Initial Thoughts on the Yanolja IPO

• Yanolja is getting ready to complete its IPO in the US in the next several months. Softbank invested about US$1.7 billion in Yanolja in 2021.

• The valuation of Yanolja could be between US$7 billion to US$9 billion. The company could raise nearly US$400 million in this IPO.

• Overall, we are concerned about the valuations of Yanolja if indeed the bankers push ahead with the IPO at the valuation range of US$7 billion to US$9 billion.

Yanolja is getting ready to complete its IPO in the US in the next several months. Based in Korea and established in 2005, Yanolja is a leading travel based app. According to Bloomberg, the valuation of Yanolja could be between US$7 billion to US$9 billion. The company could raise nearly US$400 million in this IPO. Yanolja is one of the largest Korean companies IPO in 2024. Goldman Sachs and Morgan Stanley are the main bankers in this deal.

Photo by Priscilla Du Preez 🇨🇦 on Unsplash

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Company Background

Yanolja's core business is in travel booking but it is also expanding into loud services for the hospitality and leisure sectors. Yanolja was originally established as an online community specializing in the Korean motel sector. It later expanded into booking services for motels, hotels, and leisure activities. Yanoljia originally started as a well known app for booking hotels, especially for "love hotels" in Korea. Yanolja means "let's play" in Korean.

Yanolja is the largest travel app in Korea and it is also considered to be one of the largest property management software provider in the world. As Yanolja has gained its business scale, it has emphasized the transformation of the company into a data platform company. The company has developed an integrated operation solution for the accommodation reservation platform called Y-Flux, which provides various services including automating room management and self check-in with apps.

Among its services provided, Yanolja has emphasized its cloud business and the company aims to become a cloud company specializing in the hotel operations that include integrated operating system for accommodation facilities. This software business can potentially become a more stable, continuous income stream if the company is able to increase its market share in this segment.

• Wholly-owned subsidiary in US set up - The company set up a wholly owned subsidiary in the United States (named Yanolja US LLC, in Delaware) in February 2024 which is part of the company's attempt to go public on either the New York Stock Exchange or Nasdaq. Last year, the company hired former New York Stock Exchange executive Alexandre Ibrahim as its corporate chief financial officer.

• Acquisitions - Yanolja has made several acquisitions in the past several years. Yanolja acquired Israel-based Go Global Travel and US-based Innsoft last year. Yanolja also acquired a Korean e-commerce and ticketing company called Interpark in 2022. Yanolja acquired Woori Pension (the largest pension reservation service in Korea) and Daily Hotel (the largest hotel restaurant reservation app in Korea) in 2019. Yanolja also invested in a Southeast Asian hotel chain called Zenrooms.

• Major Global Competitors - Yanolja's major global competitors include Airbnb (ABNB US) and Expedia Group, Inc. (EXPE US).

• Major Shareholders - The founder Lee Soo-Jin owns a 16.33% stake in Yanolja. Other family members own the following stakes (Park Jung-Hyun - 5.13%, Lee Ye-Nim - 5.13%, and Lee Ye-La - 5.13%). Other related parties own an additional 9.45% stake.

• Softbank's Investment - Softbank invested about US$1.7 billion in Yanolja in 2021, valuing the company at US$6.8 billion at that time. Softbank currently owns a 24.9% stake in Yanolja through its Vision Fund.

• Other major institutional investors - In addition to Softbank, other investors in Yanolja include GIC, Booking Holdings, Skylake Investments, Sbi Investment Korea (019550 KS), and Aju IB Investments.