South Korean retail heavyweight Shinsegae has drawn a US$938 million investment to help it build a major e-commerce business.
Shinsegae has signed an initial funding agreement with BRV Capital and private equity company Affinity Equity Partners as it strives to make the most of a rapidly expanding Korean online shopping market.
Shinsegae says it will carve off the online business divisions of Shinsegae Department Store and its discount store chain operator E-Mart and merge them to establish a separate affiliate dedicated to the group’s e-commerce business.
“Our goal is to launch the new affiliate within this year,” Choi Woo-jung, head of the group’s e-commerce business, said in a press release. “Further details, including the name of the company and its structure, will be decided down the road.”
Shinsegae plans to carry out new business projects, including mergers and acquisitions, through the spun-off company and raise it as the business group’s key distribution channel with an annual revenue of 10 trillion won by 2023.
Shinsegae’s e-commerce business has been posting double-digit growth since the launch of an integrated online mall for its subsidiaries, SSG.com, in 2014, it said. The online platform logged 1.5 trillion won (nearly $1.4 billion) in sales in the first nine months of 2017.
The retailer’s move to expand its e-commerce business comes in line with a steep rise of purchases made over the Internet in South Korea as the use of smartphones has fully caught on with local consumers.
Transactions made with personal computers and other mobile devices reached 7.55 trillion won November last year, up a solid 21.7 per cent from a year earlier, according to data from Statistics Korea.