HKMA backs $47m investment for minority stake in S Korean Kakao Mobility

Seoul, South Korea. Photo by Emile-Victor Portenart on Unsplash

Hong Kong Monetary Authority (HKMA), Teacher Retirement System of Texas (TRS) and University of California Retirement Plan (UCRP) have jointly invested KRW 50 billion ($47 million) to purchase a minority stake in South Korean taxi-hailing service provider Kakao Mobility Corp. This is part of a co-investment led by private equity firm TPG, according to a report by the Korea Economic Daily.

HKMA is Hong Kong’s central bank and sovereign wealth fund, while TRS is a US pension plan with $147.4 billion in assets. UCRP manages $107.2 billion in assets. The three funds have purchased a 3.07 per cent stake in Kakao Mobility as at 13 February, with Kakao Corp maintaining a 69.3 per cent in Kakao Mobility following the stake sale.

Other co-investors in the consortium include Japanese financial services firm Orix Corporation and Korea Investment Partners Co. Ltd., having invested KRW 100 billion, while TPG injected KRW 350 billion. TPG also has an equity interest in US transport services firm Uber Technologies.

In June 2017, TPG announced it had entered into a sale and purchase agreement that saw it lead a consortium to acquire a 30 per cent stake in Kakao Mobility, which is a spin-off from Korean messaging services provider Kakao Corp. for a consideration of 500 billion won. The spin-off of Kakao Mobility is part of Kakao Corp’s global growth ambitions.

This latest investment is also a reflection of “TPG’s investment strategy of encouraging co-investment from LPs” versus raising a mega-fund,” according to sources. More recently, it announced the acquisition of a carpooling startup called Luxi to strengthen its market position and offerings.

Kakao Corp is listed on the Korea Exchange (KRX) and has spun off Kakao Mobility, which provides the Kakao Taxi, Kakao Driver, and Kakao Navi services. The unit was established as part of a strategic move to pursue new growth in the mobility business, with the investment part of a strategic partnership with TPG. Kakao Mobility is led by CEO Joohwan Jung, who was previously the vice president of Kakao’s mobility business.

Its communication platform provides email services, while its mobile social platform messenger services enable online communications and socialisation, in addition to news content, crowdfunding and payment services, as well as the sharing of various media assets.

The firm is implementing aggressive investment strategies with a focus on the Internet finance and mobile segments. It recently listed global depository receipts on the Singapore Exchange (SGX) to raise $1 billion as part of this growth approach.

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