Beyond Unicorn to Decacorn? Musinsa’s IPO Drive Faces Skepticism Over $7.4 Billion Valuation

Musinsa, IPO Initiative
Lead Underwriter Selection Process
$7.4 Billion Valuation Target, Market Doubts

Musinsa, South Korea’s leading fashion platform, has distributed requests for proposal (RFP) for its initial public offering (IPO) to major domestic and international securities firms. While the company is preparing to appoint lead underwriters, concerns are mounting that many brokerages may walk away from the deal, given what is seen as an excessive valuation demand. In particular, the method of valuation sought by financial investors (FIs) that fueled Musinsa’s growth—placing the company’s worth at over $7.4 billion—appears difficult for the market to accept.

RFPs Sent to Ten Domestic and Foreign Brokerages

According to the investment banking industry on the 19th, Musinsa sent RFPs the previous day to around five to six leading domestic securities houses as well as several global investment banks. The proposals reportedly included standard requests such as IPO structuring and post-listing stabilization measures. Musinsa plans to review the submissions and appoint underwriters after an internal evaluation. Earlier this month, the company held a series of IR-style meetings with major domestic securities firms, presenting its business strengths to bolster the completeness of their proposals.

Musinsa, which has begun a full-fledged push for global expansion this year, chose an IPO as a means of securing funding. The company intends to open offline stores directly in China and build infrastructure in overseas markets to enable faster delivery, requiring significant investment capital. Since June, Musinsa has been in discussions with key FIs over its target valuation and has now formally launched the IPO process.

Musinsa currently aims for a valuation exceeding $7.4 billion and has kept both the Korea Exchange (KOSPI) and the Nasdaq in the United States open as potential listing venues. Based on its recent overseas momentum, the company believes it could enter the market within two to three years at that target valuation. Musinsa’s “Global Store” platform has seen annual transaction volume surge by an average of 260%—led by Japan—bringing its global expansion prospects into clearer focus.

Current Fundamentals Suggest a Ceiling Near $1.1 Billion

However, some argue that a $7.4 billion valuation is overstated. To be sure, Musinsa’s performance has been strong. Revenue climbed from $760 million in 2023 to $950 million last year, while operating profit swung from a $6.6 million loss to a $79 million surplus. In the first quarter of this year, the company posted $220 million in revenue and $14 million in operating profit, extending its earnings momentum. Transaction volume in April and May also reportedly grew about 20% year-on-year.

Given the scale of the IPO, comparable peers across sectors are being discussed. These include SiliconTwo (22.08), Shinsegae International (17.15), F&F (7.76), LF (7.17), AU Brands (26.89), Xexymix (9.50), Handsome (9.68), D’Alba Global (140.50), APR (47.65), Amorepacific (14.45), and Korea Kolmar (22.56). Their average price-to-earnings ratio (PER) is about 28.96, serving as a benchmark for Musinsa’s valuation.

Yet if Musinsa’s Q1 net profit of $12 million is annualized to $47 million and multiplied by the average PER, the implied valuation falls short of $1.1 billion. CEO Junmo Park has declared a goal of reaching $2.2 billion in global transaction volume by 2030. Only if this sales target materializes while maintaining current margins could Musinsa aspire to a valuation above $3.7 billion.

Nonetheless, cases of IPO pricing applying a PER multiple above 30 are exceedingly rare, even for high-growth firms. For instance, although D’Alba Global now trades at over 150 times earnings, its preliminary IPO filing used a multiple of just 19.93, later adjusted slightly to 20.99 in the securities registration, still triggering debate over inflated valuation. Considering this precedent, if Musinsa applies a multiple in the 20 range, its maximum valuation would be capped around $1.1 billion.

Equity Dilution and Fundraising Challenges Loom

If Musinsa lists at around $1.1 billion—below the $2.6 billion valuation achieved in its Series C round—substantial dilution for existing shareholders would be inevitable. In 2023, Musinsa secured fresh capital at that $2.6 billion valuation from global private equity firm KKR, alongside Wellington Management, Korea Development Bank, and IMM Investment.

The company’s valuation has ballooned in recent years. In March 2021, Musinsa raised funds in a $98 million Series B round led by Sequoia Capital and IMM Investment at a $1.9 billion valuation. A year earlier, Mirae Asset Capital had considered investing when Musinsa was valued at $1.1 billion. Even then, industry consensus was that Musinsa had secured favorable terms in a tightening venture funding environment.

But challenges remain for a successful IPO. Chief among them is capital raising. Should Musinsa target a valuation above $7.4 billion, its IPO proceeds alone could exceed $1.5 billion. For comparison, Lotte Global Logistics, with a valuation of just $370 million, was forced to abandon its IPO earlier this year due to weak demand forecasting. Securing overseas institutional investors will be essential, yet large-scale funds that favor long-term investments remain wary of volatile Korean IPOs.

Concerns also center on underperforming subsidiaries. Musinsa operates 16 affiliates, of which 13—excluding Musinsa Logistics, Musinsa Trading, and STDC—recorded losses as of Q1. Particularly, SLDT, operator of limited-edition resale platform “Soldout,” racked up cumulative operating losses of $79 million from 2021 through Q1 2024. In response, Musinsa absorbed SLDT last year, and in April this year declared an emergency management regime to improve internal efficiency.