Anchor invests in entertainment unit of Korea's Kakao

Anchor will acquire about 1.1 million shares in Kakao M at a price of KRW182,771 across two tranches to be finalized in May, according to a filing. This represents a 49% premium versus a pre-IPO offer from the subsidiary in October last year, which attracted investment from Nonghyup Bank and a number of local media celebrities. 

It deepens significant exposure for the private equity firm to Korea’s entertainment and media market, which is estimated to be worth more than $3 billion with a music segment seeing revenue growth of around 18% a year. Anchor has previously invested KRW125 billion in Kakao’s mobile content service Podotree and acquired a controlling position in ticketing platform Tmon alongside KKR. 

Kakao M was established as a music publisher under the name Seoul Records in 1978 and launched some of Korea’s first digital audio platforms and streaming services in the early 2000s before being acquired by Kakao in 2016. The company has since diversified substantially into talent management and video content, including movie production and short-form online drama series.  

In December, Kakao M expanded into live performances with the KRW27 billion acquisition of theatrical events producer Shownote via a subsidiary called Starship Entertainment. Shownote specializes in plays, musicals, spoken-word performances, and concerts, being perhaps best known for staging Korean adaptations of international Broadway-style productions and tours for K-pop singers. 

Seoul-based Anchor invests primarily in local growth and consolidation strategies. The firm closed its debut fund in 2013 at $500 million and raised $850 million for a follow-up in 2015. Fund III was launched in 2018 with a target of $1.3 billion. Previous investment in the media and entertainment space includes a KRW125 billion commitment in 2018 to Line Games, a Korean videogame unit of Japan’s Line, which is itself a subsidiary of Kakao’s domestic rival Naver. 

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• Topics
• North Asia
• Expansion
• Consumer
• Media
• South Korea
• Anchor Equity Partners
• Growth capital
• TMT