Shinsegae buys Korean online fashion mall from IMM PE

Shinsegae Group has acquired South Korea's leading online fashion platform from IMM Private Equity, in a transaction estimated at between 250 billion and 300 billion won ($221 million-$265 million).

Shinsegae's e-commerce arm SSG.COM signed an agreement to buy an 80% stake in W Concept from the Seoul-based PEF on Apr. 1, according to investment banking sources. With the transaction, IMM PE made a lucrative exit from the online retailer in three years, securing about three times its acquisition price of around 80 billion won. 

To purchase W Concept, the retail giant competed closely with the country's No.1 online fashion store Musinsa Co. backed by Sequoia Capital, a US venture capital firm. Citigroup Global Markets handled the sale.

The acquisition comes after Shinsegae made it to the final round of bidding for eBay Korea, the country's third-largest e-commerce player, aiming for the top position in the country's e-commerce market.

W Concept is among the big five online fashion apps in South Korea, including Musinsa, Zigzag, Ably and Brandi. It targets young women in their twenties and thirties with an array of stylish and contemporary brands for clothing and shoes.

Despite its higher average selling price of 130,000 won than the average 50,000 to 60,000 won among other domestic online fashion malls, W Concept boasts of high customer loyalty thanks to its trendy fashion items. It is now bolstering its product lineup with high-end fashion brands, while diversifying into men's apparel and beauty products.  

South Korea’s online fashion malls have been booming, attracting Gen Zers and millennials. That is in stark contrast to offline rivals which have seen a sharp drop in customer traffic due to the pandemic-caused restrictions. 

SSG.COM, in which Affinity Equity Partners is No.2 shareholder with an unspecified stake, is at the forefront of Shinsegae's expansionary moves in the online market. The e-commerce brand has been rapidly gaining territory, posting 37% year-on-year growth last year with 3.9 trillion won in transaction volume. But its e-commerce business is restricted to fresh groceries and luxury products.

The purchase of W Concept will broaden Shinsegae's customer base to the millennials, or those born between the 1980 and 1990s, as well as reinventing its image.  

In its pursuit of online expansion, Shinsegae agreed to a 250 billion won share swap with the country's online behemoth Naver Corp. last month. Its 100-billion-won acquisition of SK Group's baseball club in February this year was also aimed at creating synergy with its retail business.

Since the 2017 purchase of W Concept, IMM PE had improved the online platform's logistics and IT systems, while diversifying its business. Earlier this week, IMM fully exited its 300 billion won investment in the country's No. 2 electric wire manufacturer by selling a majority stake in Taihan Electric Wire Co. to a domestic apartment builder.

Last December, IMM raised 2 trillion won for its largest flagship fund, RoseGold IV, after divesting from Hollys Coffee and Lezhin Entertainment, an online webtoon platform, earlier in that year.

Write to Chae-Yeon Kim at why29@hankyung.com
Yeonhee Kim edited this article.