Kakao Mobility accelerates IPO move despite headwinds

Kakao Mobility's logo displayed at the firm's headquarters located in Seongnam city's Bundang District / Newsis

By Anna J. Park

Kakao Mobility selected a group of local and global securities firms as its IPO underwriters, accelerating its IPO process despite a series of setbacks.

According to the investment banking industry, the mobile-based mobility platform company tapped Korea Investment and Daishin Securities as the main underwriters last week, along with global firms including Credit Suisse, Morgan Stanley and Citi Global Markets.

The company, a taxi-hailing service operator, sent its request for proposal (RFP) documents to the brokerage industry in August last year, planning to appoint a group of underwriters for its IPO. Yet, the move had somewhat stalled over growing public anger of the conglomerate's overextension into every sector of the economy, ranging from finance, ride-hailing industry, fashion and hair salons, which led to criticism that it is threatening the livelihoods of small-sized mom-and-pop businesses.

Kakao's continuous subsidiary spin-offs coupled with unethical personal financial practices among top management of the group's subsidiaries have impaired shareholder value of Kakao stocks and soured public sentiment. Kakao Pay management, for example, collectively dumped stock options within just one month of the fintech firm's IPO late last year, stirring public anger.

Against this backdrop, President-elect Yoon Suk-yeol vowed to prohibit the excessive spin-offs of companies and subsequent IPOs of the spin-off businesses as one of his key economic pledges to protect minority shareholders' rights. If the incoming administration follows through with a strengthened regulatory stance, Kakao Mobility's IPO viability could come under pressure.

The mobile platform company, however, cannot just sit idly and wait for better external conditions to come, as it received a huge amount of global investments from TPG and Carlyle as well as $50 million from Google in April last year, mostly on condition of going public in 2022, at the earliest.

Thus, the company decided to move faster for a successful IPO, aiming to make its stock market debut as early as the second half of this year. Although President-elect Yoon's pledge to prohibit company spin-offs without concrete measures in place to secure original shareholders' stock values would not be retroactively applied to Kakao Mobility, the company seems to have good reason to reduce its risk exposure to the new government's strict stance by getting the job done as soon as possible.