Kakao Entertainment Considers New York for Its $18 Billion IPO

By Adriaan Brits Monday, April 12, 2021

Kakao Entertainment Corp. is considering having its initial public offering (IPO) in New York next year, just a month after the South Korean business giant Coupang held its IPO in the city.

A live concert venue.

Potential Business Valuation Estimated at Almost $18 billion

The entertainment company, which is an affiliate of the South Korean tech business titan Kakao, is still planning to have its IPO in South Korea as the primary choice.

However, the entertainment company is also exploring New York as an option after Coupang’s $4.6 billion became the largest US IPO since Uber Technologies went public in 2019, Kakao’s CEO Lee Jinsoo told Bloomberg.

Kakao Entertainment could reach a business valuation of more than ₩20 trillion ($17.8 billion) after the IPO, which is two times higher than the company’s current business value.

“Coupang’s listing gave me hope that Korean businesses with global potential like Kakao Entertainment can get a much better valuation than they would have before,” Jinsoo said and added that the company will prepare for the debut a year from now.

In addition to Kakao Entertainment, other South Korean companies are also considering going public in the United States (US) after Coupang’s outstanding IPO. These include ecommerce giant Market Kurly, Viva Republica, as well as Kakao Entertainment’s sister companies.

The CEO added that the aim is to “establish our webtoon platform around the world, in every country in every language.” According to him, the company has reached about 10% of that goal. Kakao’s webtoons are available in over five languages.

The business is also looking to invest around ₩1 trillion ($889 million) for local and overseas acquisitions, Jinsoo added. The company is currently negotiating to buy the management rights of US online fiction app Radish and the webtoon platform Tapas Media.

Apart from being popular in South Korea, Kakao is attracting interest in Japan as well, the largest comics market in the world. Kakao’s Piccoma was the most popular manga app in the country in 2020. The company’s webtoon business sales tripled last year to ₩414.6 billion ($371 million), while Kakao’s webtoons represented 40% of Piccoma’s sales.

“The Japanese digital comics market could triple in three to four years,” said Kim Hyunyong, an analyst at Hyundai Motor Securities Co. and estimated global digital comics and web fiction markets to expand by 30% annually.

Last month, the CEO of the parent company, Yeo Min-soo, announced plans to increase shareholder value through planned IPOs of its affiliates. The company is also looking to diversify its investor base as South Korean investors represent over two-thirds of all investors.

“KakaoTalk will take the central role in terms of expanding group-wide businesses and this will help strengthen the core competency of Kakao Group. Plus, we plan to boost shareholder value through planned IPOs of the group's affiliates," said Yeo Min-soo in a conference call with investors.

Summary

South Korean company Kakao Entertainment is considering a New York IPO next year, after another South Korean company, Coupang, had huge success with its IPO in the city last month.

About the Author


Headshot for author Adriaan Brits

As an analyst of global affairs, Adriaan has an MSC from Oxford, with diverse interests in the digital economy, entertainment, and business. He is a specialist trainer in Advanced Analytics & Media.

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