Kakao’s key affiliates had not guaranteed any investor protection measures such as call options and drag-along rights when they raised money from PEFs. The difficulties in Kakao Entertainment’s fundraising indicated sluggish investor sentiment in the local pre-IPO market, analysts said. The value of its stake in Kakao Entertainment was estimated to have grown to more than 2 trillion won on the assumption of the company’s corporate value at 12 trillion won. 2 shareholder with a 17.14% stake, invested 125 billion won in KakaoPage in 2016 and 209.8 billion won in Kakao M in 2020. The industry is keeping an eye on whether Hong Kong-based Anchor Equity Partners to participate in Kakao Entertainment’s latest pre-IPO. Since then, the company has tried to secure investment from selected major PEFs, but none of them provided funds. Kakao Entertainment failed to raise the money as the consortium withdrew the investment plan at the last minute. Its corporate value was estimated at about 18 trillion won during the talks. at that time to raise about 1 trillion won. It was reportedly in talks with a global PEF consortium that included KKR & Co. “We will go public with a corporate value of more than 20 trillion won,” Kakao Entertainment CEO Lee Jin-soo said in an interview with a foreign media in April 2021.īut investor sentiment toward Kakao Entertainment has been cooling down rapidly since late last year. Such expansion boosted its confidence in an IPO. The company raised its global ambition with takeovers of foreign content platforms such as Tapas Media Inc., Radish Fiction Inc.
![roadblock ipo roadblock ipo](https://apicms.thestar.com.my/uploads/images/2021/05/10/1143750.jpg)
Kakao Entertainment has grown up to a major player with 47 affiliates through acquisitions of content producers and entertainment management agencies since then. The entertainment behemoth was founded early last year by merging Kakao’s entertainment platform Kakao M with a webtoon and web novel platform KakaoPage. Kakao Entertainment is Kakao’s core affiliate that was expected to hit a jackpot from a listing after the successful IPOs of KakaoBank Corp.
ROADBLOCK IPO TV
The difficulties cast doubts over if celebrities such as Yoo Jae-suk, the top comedian of the famous TV show Running Man, could collect their investment and profit after participating Kakao Entertainment’s rights offering last year that valued the company at about 12 trillion won. “The market conditions have been so soured that Kakao’s key affiliate, which had enjoyed the liquidity party most, is facing difficulties in a fundraising,” said an industry source.
![roadblock ipo roadblock ipo](https://skift.com/wp-content/uploads/2018/10/Lead-Image-1.png)
![roadblock ipo roadblock ipo](https://mananrangbulla.files.wordpress.com/2022/06/image.png)
Kakao Entertainment is currently in talks with a financial investor, but the company may not be able to raise the money unless it lowers its enterprise value or guarantees measures for a profitable exit. Global PEFs are, however, reluctant to participate in the pre-IPO as they see Kakao Entertainment’s corporate value, which is estimated to reach up to 15 trillion won, as excessive.
![roadblock ipo roadblock ipo](https://kalkinemedia.com/storage/uploads/original/1615171986_60459192c568b_mceclip1.png)
Kakao Entertainment is seeking to raise 500 billion won ($398.6 billion) from global major private equity firms through a pre-initial public offering to fund the acquisition of SM Entertainment Co., South Korea’s entertainment powerhouse, and improve financial structures. Kakao Entertainment Corp., a unit of South Korea’s mobile platform giant Kakao Corp., is struggling to raise money as surging inflation and rising interest rates dampened investor sentiment. Kakao's office in Pangyo, the so-called Silicon Valley of South Korea