Kakao Mobility pursues US IPO, seeks to raise $1 bil.

Kakao Mobility is pursuing a U.S. initial public offering (IPO) targeting about $1 billion in proceeds, about four years after its plans to list on the Korean stock market fell through.

The mobility platform's parent company, Kakao, confirmed Thursday that Kakao Mobility had confidentially submitted draft registration documents to the U.S. Securities and Exchange Commission (SEC) on July 2 for a potential American depositary receipt (ADR) offering.

However, the company said the offering size and other details have not yet been determined.

A confidential submission allows a company to undergo SEC review before publicly disclosing detailed information about its offering.

Bank of America, Morgan Stanley and UBS reportedly have been named as potential underwriters for the offering.

The potential U.S. listing marks Kakao Mobility’s return to the IPO market after it shelved plans for a Korean listing in 2022. The company operates Kakao T, a mobility platform offering taxi-hailing, designated driver, parking and navigation services.

Kakao Mobility had faced regulatory scrutiny and stirred controversy over allegations that it favored affiliated taxi drivers in assigning passenger calls. Its domestic listing plans also faced broader scrutiny over its parent company Kakao’s practice of spinning off and separately listing subsidiaries.

The company has recently taken steps that could support a potential overseas listing.

In May, Kakao Mobility, its second-largest shareholder Texas Pacific Group (TPG) and Kakao launched a committee to enhance shareholder value and discuss measures to improve the company's corporate value.

The company has also reportedly been undergoing a re-audit of its financial statements for the past three years by Deloitte Anjin. Its board has also reportedly approved plans for a potential ADR offering, including costs, a timetable and post-listing board changes.

Kakao said TPG holds a majority of the newly launched committee's seats.

"The committee is reviewing various options for the exit of financial investors' investments, and an ADR backed solely by TPG's stake in Kakao Mobility is also included among the options under review,” the company said.

However, Kakao stressed that its board has not made any decisions regarding the potential listing.

TPG, which has invested about 640 billion won ($459.7 million) in Kakao Mobility since 2017, holds about 29 percent of the company.

The U.S. listing could also help the company avoid some of the scrutiny surrounding duplicate listings in Korea, where Kakao is already publicly traded.

However, overseas listings by domestic subsidiaries can still be subject to shareholder-protection measures under revised duplicate-listing rules that took effect Aug. 3, including an assessment of the impact on parent-company shareholders and measures to protect them.

Kakao Mobility was spun off from Kakao in 2017, making the potential impact on Kakao shareholders a key issue in any overseas listing.

The SEC's confidential review does not guarantee that the IPO will proceed. Kakao Mobility has not publicly confirmed the timing, valuation or final structure of the potential U.S. IPO.