(Jan 12): Kakao Entertainment Corp has won US$930 million (RM4.05 billion) from the sovereign wealth funds of Saudi Arabia and Singapore, securing one of the country’s largest financing rounds at a time global investors shy away from big start-up bets.
The company, a unit of South Korean social media giant Kakao Corp, said it’s raising 1.2 trillion won by issuing about 2.26 million shares at 255,116 won apiece to Saudi Arabia’s Public Investment Fund (PIF) and Singapore’s Pwarp Investment, an investment vehicle of GIC Pte Ltd.
Kakao Entertainment, which runs a stable of apps that publish popular online animated shows and novels, will use the capital to expand its content. The company produces a slate of shows for Netflix Inc, capitalising on booming interest in South Korean content from K-pop to movies since the advent of Squid Game.
Kakao shares, which are down 37% from a year ago, fell 0.7% on Thursday (Jan 12).
The deal follows Saudi Crown Prince Mohammed Salman’s much-hyped visit to Seoul in November, which local media reported could precede a raft of investment deals for South Korean conglomerates worth US$30 billion.
Saudi Arabia, which wants to lower its reliance on oil exports, has been beefing up investment in games and entertainment providers, such as South Korea’s NCSoft Corp as well as Tokyo-listed Nexon Co. PIF also lifted its stake in Japan’s Nintendo Co to 6.1% from 5%, according to a filing. Singapore’s GIC has reportedly owned stakes in a broad portfolio of games-related firms.
Kakao Entertainment had been considering a New York initial public offering since at least 2021, though the timeline now looks uncertain, given cratering tech valuations worldwide.
The Pangyo-based entertainment company, whose online web cartoons or “webtoons” are popular at home and in Japan, has been expanding its businesses overseas through start-up acquisitions, including of Tapas Media and SoftBank Group Corp-backed Radish.
“It’s significant that we were able to secure funds of this scale at a time when both the South Korean and global markets face a lot of uncertainty and investment sentiment is weaker,” Kakao Corp chief investment officer Bae Jae-hyun said in a statement.