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Concurrent deal closings by Kakao, Naver: Mere coincidence?

Rivalry evolves into global expansion, new businesses

By May 24, 2021 (Gmt+09:00)

Kakao Japan runs Piccoma, a leading webtoon platform
Kakao Japan runs Piccoma, a leading webtoon platform

Early this month, when Anchor Equity Partners was in intense negotiations with Kakao Corp. over the terms of its 600 billion won ($530 million) investment in the South Korean mobile giant's Japan unit, the private equity firm was suddenly given short notice: "Anyhow, get ready soon. We need to get the deal done by May 20."

At the time, Anchor Equity had expected to reach an agreement on the investment around the end of May at the earliest. But it had to hurry to meet the new deadline.

Finally, Anchor Equity on May 20 inked the 600-billion-won investment in Kakao Japan that runs the webtoon platform Piccoma. The deal valued Kakao Japan at 8.8 trillion won, higher than the parent company's earlier projection of 6 trillion won and closer to its archrival Naver Webtoon's 10 trillion valuation estimated late last year.

Later in the day, Naver Webtoon announced a 200 billion won rights offering to its existing shareholders. 

Their almost-simultaneous funding deals followed a similar coincidence that happened just one and a half weeks earlier.

On May 10, Naver unveiled its 684.8 billion won acquisition of Wattpad, the world's largest web novel platform based in Toronto. The following day, Kakao Entertainment Co. matched the announcement with its purchase of both the US-based mobile fiction startup Radish Fiction Inc. and the third-largest US digital comics platform Tapas Media Inc. 

Their seemingly coincidental deal closings may symbolize their intense rivalry not only in the webtoon market but also in other areas such as e-commerce, which is extending beyond Asia.


Naver Webtoon, launched in 2004, has become the No. 1 webtoon operator in the US, Japan and Korea. Kakao joined the webtoon, or online comics, market in 2016.

But latecomer Kakao has been stepping up the competition against Naver Webtoon. In July of last year, Kakao launched a huge marketing campaign to proclaim that its webtoon platform in Japan, Piccoma, had overtaken Naver's counterpart LINE Manga. 

Adding fuel to the fire, Kakao claimed last November that Picccoma was leading in the global webtoon market. Naver rebutted the claim immediately: "We are still the world's No. 1 in the webtoon market, according to our studies."  

This month's funding deals for the webtoon units may prove favorable for Kakao. Unlike Naver, which sold its new shares to its existing shareholders, Kakao brought in the new investor Anchor Equity for a 15% stake in Kakao Japan. Late last year, Naver Webtoon sought new capital from outside investors ahead of its planned US listing. No progress has been reported in that regard.
The characters of Ryan & Friends (Courtesy of Kakao Corp.) The special purpose company, through which Anchor Equity invested in Kakao Japan, is also named Ryan & Friends.
The characters of Ryan & Friends (Courtesy of Kakao Corp.) The special purpose company, through which Anchor Equity invested in Kakao Japan, is also named Ryan & Friends.

Based on the lofty valuation of Kakao Japan, Anchor Equity may be able to earn a compound return of at least 8%, but only if the webtoon platform doubles in value over the next five years at least. PEF sources played down the possibility of its valuation surge within the next few years. 

Instead, one of the industry sources joked that the prospective hefty returns from both the banking and entertainment arms of Kakao may help Anchor Equity endure modest returns from the webtoon unit for the time being.

Last year, Anchor Equity invested 250 billion won in Kakao Bank and 210 billion won in Kakao M Corp., an entertainment unit. The banking platform is preparing for an initial public offering this year. 
Concurrent deal closings by Kakao, Naver: Mere coincidence? 


Now Kakao and Naver are competing for the same target: Munpia Inc. Munpia is the country's No. 3 web-based novel platform after Naver and Kakao, with an estimated enterprise value exceeding 300 billion won.

In the e-commerce sector, Kakao came close to competing with Naver to bid for eBay Korea. Before the sale process kicked off, Kakao was the first among potential bidders to express interest in the Korean operations of the US e-commerce giant, according to sources. But Kakao abandoned its bid for eBay Korea and instead, snapped up domestic fashion app Zigzag in April of this year.

"Let's do more M&As -- at least one more -- than Kakao." That's the mantra from Naver's working-level officials and vice versa for Kakao.

Their heated rivalry, a boon to investment bankers, is becoming a key driving force behind their expansionary moves. Kakao, once derided as a domestic player, has been gearing up for global expansion to catch up with hometown rival Naver.

In turn, the competition has forced top online portal Naver to shift from its usual regulatory crackdown-avoiding, low-profile stance in order to maintain a wide gap with Kakao.

Write to Jun-ho Cha at

Yeonhee Kim edited this article.

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