This article was published on March 4, 2025, at 4:53 p.m. on the ChosunBiz MoneyMove website.
The value of the luxury distribution platform Balan plummeted. At one point, its corporate value reached 300 billion won, but recently the pre-money valuation for the issuance of convertible bonds (CB) fell below 30 billion won. However, there are assessments in some quarters that "Balan is relatively better off in this situation."
On the 4th, according to the venture capital (VC) industry, Balan recently secured 15 billion won in new investments. It is understood that SILICON2, a KOSDAQ-listed cosmetics distribution company, will acquire the CBs issued by Balan, investing a total of 15 billion won in two rounds of 7.5 billion won each.
The conversion price was set at 61,171 won per share. The pre-money valuation, taking into account Balan's total number of issued shares (477,011 shares), was calculated at 29.2 billion won. Assuming a full conversion of the 15 billion won CB into common stock, the post-money valuation (investment valuation) is estimated to be slightly higher at 44.1 billion won.
Balan was established as a luxury distribution platform in 2015. It experienced rapid growth amid the COVID-19 pandemic but faced a crisis due to intensified competition, high interest rates, and economic recession, having been valued at 300 billion won during its Series C funding in 2022.
Balan's current funding round is reported to be a choice for survival, as it has not been profitable even once since its establishment and has completely run out of liquidity. As of the end of 2023, its accumulated loss was 78.5 billion won and it received notes of 'uncertainty regarding going concern' from auditors.
In particular, it is known that last year, Balan attempted to raise funds again but failed to secure investors other than SILICON2. There were rumors that Chinese companies Alibaba and Pinduoduo, as well as Japan's Zozotown, had valued Balan at 500 billion won and were pursuing large-scale investments, but these claims were baseless.
As Balan chose to survive, the investment structure was designed to favor SILICON2. While its corporate value has shrunk to one-tenth, it announced a total investment plan of 15 billion won; however, further investment following the initial 7.5 billion won will depend on Balan achieving operational profit on a monthly basis.
After the 15 billion won CB investment, SILICON2 will also become the largest shareholder with a 33.95% stake in Balan upon conversion. The maturity interest rate is 4%. Additionally, a call option granting the right to secure 50% of Balan's equity from the day the 2027 audit report is disclosed until the end of 2028 has been granted.
It is reported that the existing investors reacted strongly. This is because Shinhan Capital and Woori Venture Partners, which participated in Balan's Series B funding in October 2022, invested a total of 25 billion won at a corporate value of 300 billion won. The value of the equity has dropped to 2.5 billion won.
A VC representative, who is a shareholder of Balan, noted that "the issuance of this CB was conducted without explanation to the investors during the financing process and was communicated only after the decision was made," adding that "at the time of Series A funding, the corporate value was between 50 billion to 60 billion won, but a write-down of investor assets has become unavoidable."
However, the market assesses that this was an unavoidable choice. To survive, it was necessary to secure funds, and the fact that Balan secured a strategic investor (SI), SILICON2, is seen as a relatively better situation compared to competitors. Currently, the luxury platform's secondary transactions are completely halted.
Balan plans to utilize the 7.5 billion won investment for accelerating overseas expansion. In particular, it plans to leverage the logistics network of SILICON2, known as a leader in global K-beauty, to expand the base of K-fashion sales. Balan also introduced its global luxury platform, balan.com, in May of last year.
Another Balan shareholder noted that "there are no financial investors willing to participate in the luxury platform in the current situation," stating, "While the value of equity has dropped significantly, apart from waiting for Balan's growth through strategic collaboration with SILICON2, there is nothing investors can do."
Meanwhile, the operation of luxury platforms has been ceasing one after another. Following the suspension of operations of the luxury platform 'Luxury Gallery,' managed by E-Land Global last December, it was recently reported that the luxury pre-order platform 'Decode' has also ceased operations.