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IPOs

Kakao delays mobility unit IPO as parent comes under fire

The taxi-hailing service firm’s IPO is unlikely this year with its valuation set to be slashed, analysts say

By Sep 17, 2021 (Gmt+09:00)

Kakao Mobiity
Kakao Mobiity

Kakao Mobility Corp., South Korea’s largest taxi-hailing company, has indefinitely postponed its planned initial share sale, as its parent, Kakao Corp., is under growing pressure to comply with requests for shared growth.

According to the investment banking industry on Friday, Kakao Mobility has informed local and foreign brokerages of its decision to halt a process to select lead managers for its IPO.

The company was supposed to receive requests for proposals from brokerages wanting to underwrite the share sale by Sept. 17, a process that had already been extended by a week from originally scheduled Sept. 10.

Kakao Mobility provided no clues on when it can resume its IPO process, which industry officials said basically means no public share sale until the end of this year, given the limited time for preparations.

Kakao Mobility, a unit of Korea’s leading mobile platform operator Kakao Corp., has been seeking to raise new capital to develop self-driving and other mobility-related technology.

Kakao Mobility's app, Kakao T, offers Korea's most popular taxi-hailing service with 28 million registered users.

Google, the Carlyle Group, TPG Capital and Japan's Orix Corp. are among its pre-IPO investors.

Kakao T offers Korea's most popular taxi-hailing service
Kakao T offers Korea's most popular taxi-hailing service

TOUGHER REGULATIONS ON PLATFORM GIANTS

The indefinite delay comes as Korea’s platform giants such as Kakao, Naver Corp. and Coupang Corp. face tougher regulatory moves against their sprawling business expansions.

The country’s top financial regulators and the antitrust body have begun looking into the platform operators’ business practices for any wrongdoing, vowing to create a level playing field for smaller rivals.

Lawmakers, including those from the ruling Democratic Party, are considering introducing new regulations targeting big tech companies.

Under siege, Kakao Corp. on Wednesday announced a series of measures aimed at co-prosperity with small business operators.

The measures include Kakao's withdrawal from community businesses such as flower and snack delivery services that compete with mom-and-pop stores.

The Kakao group also said it is downsizing Kakao Mobility’s business such as abolishing the Smart Call service which charges additional fees to grab taxis faster, Kakao Mobility's key cash-generating service.

Kakao Mobility
Kakao Mobility

KAKAO PAY’S IPO ALSO UNDER PRESSURE

Analysts say the corporate restructuring will bring down Kakao Mobility’s valuation when it resumes its IPO.

Until recently, the investment banking industry estimated the taxi-hailing service company’s enterprise value at between 6 trillion won and 7 trillion won ($5.1 billion-$6 billion).

The company posted an operating loss of 12.9 billion won on revenue of 280 billion won last year.

In the face of toughening regulations, Kakao Pay Corp., which aims to list in October, will also likely postpone its share sale plan, industry officials said.

Under pressure, Kakao Pay, the digital settlement platform unit of Kakao Corp., last month slashed its IPO share price for its planned listing.

Shares of Kakao Corp. were trading 1.2% lower at 120,000 won in late Friday.

The stock has shed more than 23% in the past two weeks.

Write to Jin-Seong Kim at Jskim1028@hankyung.com

In-Soo Nam edited this article.

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