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Future mobility

Kakao, Google in talks over mobility partnerships

Nov 22, 2020 (Gmt+09:00)

Kakao T-branded taxi, Kakao Blue Taxi



Kakao Mobility Corp., the transportation arm of South Korea's No. 1 messaging operator Kakao Corp., is in talks with global IT giant Google over potential partnership opportunities, including equity investments, according to the investment banking industry on Nov. 22.

The partnership, should it finalize, is expected to have a positive impact on the domestic mobility platform’s enterprise value as it plans to go public next year. 

NO. 1 PLAYER IN KOREA'S TAXI-HAILING MARKET

Kakao Mobility has an 80% share of the country’s taxi-hailing market. Its transportation service app Kakao T has around 27 million users, meaning that around 72% of the population between ages 20-69 have signed up for the service.

Also, the number of Kakao T Blue Taxis, a Kakao-branded taxi franchise, has rapidly increased from 5,200 taxis in April to 13,000 taxis in October.

Offering a wide range of transportation options such as taxis, bicycles and electric kickboards, the popular Kakao T app has attracted numerous global tech companies interested in potential partnerships thanks to its portfolio of massive data, including driving-related information.

It is understood that Google and Kakao Mobility are working to fine tune the details of the partnership, such as the investment size and the enterprise value of Kakao Mobility. Waymo, the autonomous driving arm of Google, is likely to lead the equity investment.


Kakao Mobility declined to comment on the matter.

Waymo began as a self-driving car project in Google but spun off to become a subsidiary of Alphabet Inc., the parent company of Google, in 2016. The company raised around 2.7 trillion won ($2.4 billion) earlier this year and has actively explored collaboration opportunities with leading mobility firms to secure driving data.

Through the partnership, the two companies are likely to work closely together on autonomous driving technology, a key component in the Mobility as a Service (MaaS) platform that Kakao Mobility has pushed for.


Earlier in March, the company company received approval from the Ministry of Land, Infrastructure and Transport to test operate its own autonomous driving technology.


KakaoNavi app offered via Android Auto, a smart car platform launched by Google


MOBILITY PLATFORMS ON THE RISE

This is not the first time for the two companies to work together. In 2018, Google offered Kakao Mobility’s navigation app KakaoNavi via its smart driving platform Android Auto.

Recent years have seen a rise in collaboration between domestic IT companies and global mobility firms. Recently, Korea's largest telecommunications carrier SK Telecom Co. announced its joint venture plans with US-based ride-hailing platform Uber.

There is also market chatter that Tesla has begun talks with Kakao Mobility for co-marketing opportunities, such as using Tesla vehicles for Kakao Mobility's taxi franchise. 

Meanwhile, Kakao Mobility is also considering additional pre-IPO placements as a number of global investment banks, including UBS, have reached out to the company to discuss potential investment opportunities.

In 2017, the company raised a total of 500 billion won ($448 million) from private equity firms TPG and Korea Investment Partners as well as Japan-based Orix, which placed its enterprise value at around 1.5 trillion won. Currently, its enterprise value is expected to double that, at around 3 trillion won.


Write to Jun-ho Cha and Han-jong Choi at chacha@hankyung.com

Danbee Lee edited this article.

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