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Pre-IPOs

TPG to invest $222 mn in mobile banking app KakaoBank

Oct 27, 2020 (Gmt+09:00)

TPG will acquire a 2.7% stake in South Korea’s mobile banking app KakaoBank for 250 billion won ($222 million) ahead of an initial public offering scheduled for next year, the company said on Oct. 27.

The pre-IPO share deal will become TPG’s second investment in units of Kakao Corp. since it invested 500 billion won in Kakao Mobility, a taxi-hailing and chauffeur services provider, to acquire about a 30% stake in 2017.

Its track record with the investment in Kakao's mobility unit gave TPG the upper hand in a competition for the pre-IPO share deal with other global and Korean PEF, investment banking sources told The Korea Economic Daily on Oct. 26.

Following the report, KakaoBank said in a statement that it will raise an additional 500 billion won from its existing shareholders, valuing the company at 8.6 trillion won before the rights offering.

Once the new shares are issued as planned, TPG will secure a 2.7% in KakaoBank, its spokesman said.

KakaoBank is the banking arm of South Korea’s top online messaging app operator Kakao Corp. Last month, it announced a plan to go public in Seoul in the second half of next year to fund business expansion, after it turned to a net profit of 13.7 billion won in 2019.

For the pre-IPO share deal, it will sell new shares in itself to the US private equity firm. A recent surge in credit lending pushed KakaoBank's shareholders to give a nod to the pre-IPO share sale to shore up KakaoBank’s balance sheet.

Kakao Corp. is the largest shareholder in the mobile banking app with a 33.5% stake, followed by Korea Value Asset Management Co. with a 28.6% stake; Kookmin Bank with 9.9%; Korea Investment Holdings with 4.9%; and Netmarble with 3.9%.

It has 1.2 million users as of the end of April, with 17.7 trillion won in outstanding loans denominated in the won at the end of the first half of this year.

Write to Junho Cha and Ye-Jin Jun at chacha@hankyung.com

Yeonhee Kim edited this article.

(Updated on Oct. 27 after KakaoBank's official announcement)

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