TPG leads $437 million investment in Kakao's ride-hailing business
A TPG Capital-led consortium has agreed to invest KRW500 billion ($437.5 million) in a transportation-focused spin-out of South Korean internet services company Kakao Corp.
The new entity, known as Kakao Mobility, will provide taxi hailing, traffic information, and parking related services. It plans to use the capital to expand marketing channels and accelerate growth of existing brands Kakao Driver, Kakao Taxi and Kakao Navi as well as launch new products.
“As part of larger global trends, the traditional offline industry sector has been undergoing rapid transformation into developing online offerings, with the mobility business a particularly exciting and high-attention area,” Joohwan Jung, CEO of Kakao Mobility, said in a statement. “We see infinite opportunities ahead, and will strive to create new value for both users and businesses across the mobility business through strategic partnerships and by securing the top talent.”
Kakao is the product of a 2014 merger between Kakao and Daum Communications, Korea's top mobile messaging provider and one of its leading web portals, respectively. Services range from messaging and email to gaming and mobile payment. Earlier this year, its payments unit Kakao Pay received a $200 million investment from Ant Financial, the financial services affiliate of China’s Alibaba Group.
The company’s mobility operations began as early as 2015 with the launch of Kakao Taxi, which is said to currently receive up to 1.5 million calls daily. Kakao Driver, a driver call-out service popular among individuals who need to get home after a few drinks, was set up last year and now claims about 2.7 million users. Meanwhile, Kakao Navi, which uses real-time information to predict traffic volume, has 10 million users.
Revenue for the parent company amounted to KRW1.5 trillion for the 2016 financial year, compared to KRW$932.1 billion in 2015. Net profit came in at KRW67.2 billion in 2016, versus KRW78.8 billion the prior year.
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