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[Exclusive] Webtoons

Kakao Japan secures over $500 mn from Anchor Equity; valuation tops $7 bn

Kakao's Japanese unit aims to beef up its business ahead of next year's initial public offering

By May 20, 2021 (Gmt+09:00)

Piccoma is a leading webtoon platform in Japan.
Piccoma is a leading webtoon platform in Japan.

Kakao Corp.’s Japanese unit is set to secure 600 billion won ($530 million) from South Korea-based private equity firm Anchor Equity Partners. In the process, Kakao Japan has received a valuation of over 8 trillion won ($7.1 billion), positioning itself as a global platform just five years after launching its webtoon platform, Piccoma, thanks to the K-webtoon boom in Japan.

According to the investment banking industry on May 20, Kakao Japan will be sealing the deal as early as next week, in which Anchor Equity will acquire around a 15% stake in the company. 

Kakao, Korea's largest messaging app operator, holds a 78.5% stake in Kakao Japan with Kakao Page Corp. holding the remaining 21.6% stake.

The company plans to use the proceeds to enhance its Japan-based webtoon production, such as acquiring Japanese content providers and setting up a platform to foster creators. 

Some industry watchers also say that the funding is a strategic move to boost its valuation ahead of an initial public offering scheduled for next year.

"Kakao Japan will be able to obtain a higher valuation if it uses the proceeds to acquire other companies or boost its new businesses," said an IT industry official.

Anchor Equity also invested in Kakao Japan on grounds that it is a profitable platform and that the PE firm would be able to make a successful exit when the company goes public.

The PE firm has been steadily increasing its investments in Kakao affiliates. Last year, Anchor Equity invested 210 billion won in Kakao M and 250 billion won in Kakao Bank.

Itaewon Class became a huge hit in Japan.
Itaewon Class became a huge hit in Japan.

Kakao Japan operates Japan’s largest webtoon platform Piccoma, which entered the Japanese market in 2016. The platform has been posting sharp growth, logging 63 billion won in transactions in 2018, which then surged to 144 billion won in 2019 and over 400 billion won in 2020.

In the first quarter of this year, the platform came in third place among non-game mobile apps in terms of revenue growth from the previous quarter. In addition to the platform's already popular webtoon, Solo Leveling, Piccoma's new releases such as Itaewon Class also became a huge hit, helping the platform to pull in over 30 million yen in monthly sales.

While Korean webtoons account for a mere 1% of Piccoma's intellectual property portfolio, they are responsible for generating 50% of the platform's revenue.

Meanwhile, Kakao Japan's impressive valuation has drawn attention to its rival, Naver Corp., which has been competing against Kakao in the content sector, such as webtoon and web novel platforms. Currently, Naver is seeking to raise funds from foreign investors, including global VC firms, for its US-based webtoon operation, Webtoon Entertainment.

Write to Jun-ho Cha and Min-ki Koo at chacha@hankyung.com

Danbee Lee edited this article.

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