Kakao Entertainment secures up to $963 mn investment from sovereign funds

[Photos : Park Hyung-ki, AFP/Yonhap]

Kakao Entertainment, a content unit of South Korea’s mobile platform giant Kakao Corp., has secured as much as 1.2 trillion won ($963 million) investment from sovereign wealth funds in Saudi Arabia and Singapore.

According to multiple sources from the investment bank industry on Wednesday, Kakao Entertainment signed an investment contract with two institutional investors - Saudi Arabia’s Public Investment Fund (PIF) and the Government of Singapore Investment Corp. (GIC). The two sovereign wealth funds will invest the equal amount of funds in the entertainment firm valued at around 10 trillion won.

Shares of Kakao were trading 0.48 percent lower at 61,600 won as of midday Thursday.

Kakao Entertainment had carried out efforts to secure pre-initial public offering (IPO) funds from the second half of last year. The company was in talks with global private equity funds such as BlackRock Corp. and Kohlberg Kravis Roberts & Co. (KKR) for 1 trillion won investment based on 18 trillion won corporate value but they failed to reach agreement due to differences in terms.

Kakao Entertainment plans to use the proceeds to finance its aggressive merger and acquisitions. The company acquired Tapas Media, the first webtoon platform in North America, in 2021, to accelerate the global entry of webtoons and web stories.

The investment, meanwhile, is expected to open the door for greater influence of the Saudi Arabian sovereign wealth fund on Korean contents.

PIF – established in 1971 - is the world’s largest sovereign wealth fund with $620 billion in total assets. Crown Prince Mohammed bin Salman is the chair of the fund’s board. He has been focusing investments in games and information technology (IT) sector in an effort to transform industry structure that focuses on oil.

The PIF acquired a 9.26 percent stake in NCSoft Corp. this year to become the second-largest shareholder. It also purchased 7.09 percent stake in Japan-listed Nexon Co. to become the fourth-largest shareholder.