GS Retail invests $55 mn in Kakao Mobility to boost online presence

GS Retail Co. is investing 65 billion won ($55 million) in Kakao Mobility Corp., South Korea's No.1 taxi-hailing app, adding to its recent series of investments in logistics service providers aimed at boosting its online presence.

The operator of South Korea's leading convenience store chain GS25  is acquiring 3.3 million common shares to be issued by Kakao Mobility for 19,480 won apiece, or a 1.3% stake in the mobility app, according to Kakao's public disclosure on Wednesday.

The unit of energy to retail-focused GS Group has been investing heavily in the logistics sector this year, totaling 417.8 billion won. It acquired a stake in Mesh Korea Co. which runs the quick delivery service provider Vroong and shares in the country's No. 2 food delivery app Yogiyo.

The spate of investments were part of the retailer's efforts to strengthen the last-mile delivery service to increase its online presence, utilizing its 16,000 convenience stores and supermarkets nationwide in aggregate.

GS Retail announced a plan to invest 1 trillion won by 2025 to integrate its online and offline operations. Last July, it merged with GS Home Shopping Co. to better compete with not only traditional offline retailers, but also e-commerce giants such as Naver Corp. and Coupang Corp.

FROM DATA TO ELECTRIC VEHICLE-BASED DELIVERY

With the investment, GS Retail plans to improve its door-to-door delivery service infrastructure, including on-foot delivery, by using Kakao Mobility's accumulated data and vehicles, including electric scooters.

For instance, the retailer may tap Kakao's big data on allocating taxis to nearby passengers, finding the fastest routes, providing real-time traffic information and using frequencies of taxi service.

For Kakao Mobility, it could use GS Retail's stores across the country as warehouses to strengthen its business-to-business logistics service, Kakao Quick, launched last June. 

"As Kakao Mobility is accelerating efforts to use electric vehicles, we will also cooperate in the field of eco-friendly logistics such as establishing logistics bases for EVs," said a GS Retail source. 

The mobility platform operates EV-specific shops for Kakao T Blue EV taxi drivers. Last January, it also signed a memorandum of understanding with Kia Corp. to accelerate the use of EVs in the country.

"We have secured a delivery platform by acquiring Yogiyo with high brand recognition and bolster delivery capabilities through Vroong and Team Fresh," the GS Retail source noted. "We will now improve our logistics efficiency, cooperating with No. 1 mobile platform Kakao Mobility." 

Last August, GS Retail bought a 30% stake in South Korea’s second-largest food delivery platform Yogiyo after it acquired the company from Germany’s Delivery Hero SE, alongside Affinity Equity Partners and British investment firm Permira for 800 billion won.

GS Retail's 2021 investments in the logistics sector: 

Company name	Business	Investment amount	When
Mesh Korea	Quick delivery service	50.8 billion won	April
Yogiyo	Food delivery app	300 billion won	August
Team Fresh	Logistics service startup	2 billion won	October
Kakao Mobility	Taxi-hailing app	65 billion won	December
Source: GS Retail

Meanwhile, Kakao Mobility is preparing to list on the Korean stock market next year, which would pave the way for the exit of its pre-IPO investors, including Google Inc., the Carlyle Group and TPG Capital.

Other GS Group units -- GS Caltex Corp. and GS Energy Corp. -- invested a combined 30 billion won in Kakao Mobility last July.

Write to Yoo-chung Roh and Min-ki Koo at yjroh@hankyung.com
Yeonhee Kim edited this article.