Online retailer Tiki must choose between IPO or being acquired

Online shopping website Tiki, said in the next three to five years, the company would decide whether to conduct initial public offering (IPO) or be acquired by another company.-Photo theleader.vn

Ngo Hoang Gia Khanh, Head of Finance at Tiki told news website theleader.vn that the e-commerce site is preparing for a new round of fund-raising (Series D), which aims to call US$50 million to $100 million from the strategic investment funds or financial investor groups.

Series A, B, C or D correspond with the development stage of the companies that are raising capital.

Tiki expects to raise $50 million by the end of 2018 and in the next 18 months through issuing additional shares to support their research and development, infrastructure construction and user training.

Currently, Tiki is developing several mobile applications and adding new services, which are why Tiki wishes to call capital from investors in the field of e-commerce, in order to get more support for strategic planning and operations.

Former shareholders of Tiki, VNG and JD.com, in previous rounds of capital rising may continue to participate in this round. The presence of JD.com will be the fulcrum to attract other strategic investors.

JD.com is one of the two largest B2C (business to consumer) online retailers in China by transaction volume and revenue.

Recently, JD.com suddenly joined Tiki’s Series C of funding and became one of Tiki’s largest shareholders with a possible deal value of $43.7 million.

Although, Tiki had successfully raised lots of money in the past, the company also spent most of that funds to maintain their position in the market.

According to VNG’s financial report, one of Tiki’s strategic investors, it was revealed that VNG recorded an accumulated loss of $14 million when investing in Tiki.

For those firms that do not shut down or achieve financial sustainability, an exit from the fundraising cycle comes with two options, initial public offering (IPO) or acquisition.

Despite this, Tiki has no plans for an IPO until 2021 as the company wants to expand its operations even further and continue to call for capital to promote their value.

In the case of listing, Tiki prefers to board the Hong Kong stock market. As for the case of acquisition, Tiki wants to be acquired by a global brand to bring its business to a new level.

Tiki’s loss story partly reflects the general picture of the e-commerce service, unlike conventional businesses, startups like Tiki are not assessed based on their profit but mainly on market share, sales, purchase value per customer and return rate in a fast growing market like e-commerce.

Founded in 2010 by an online bookseller, Tiki has grown into a multi-faceted e-commerce platform with 250 million page views over the past year and accounts for about 10 percent of traffic on the e-commerce sites in Vietnam.

Tiki aims to expand their business to Taiwan market but this plan will not be implemented until Tiki affirms its leading position in the e-commerce market in Vietnam.