| The headquarters of Kakao Entertainment located in Bundang, Gyeonggi Province / Yonhap |
By Anna J. Park
Kakao Entertainment is widely believed to be aiming to go public by the end of this year or early next year. The entertainment subsidiary of Kakao had long considered making a debut on the local stock market, yet the IPO plan has been delayed till now, amid strong criticism against the big tech firm's continuous split-off listings that harmed Kakao shareholders' interests.
According to industry sources, the entertainment company sees that the timing will be right for them to go public either by the end of this year or early next year. Yet, the company refused to outline its stance on the matter in detail.
"The company is examining various options, but nothing has been confirmed (regarding the IPO plan)," an official from Kakao Entertainment said. "If specific plans are confirmed, the company will announce them," the official added.
Kakao Entertainment grew to be a major entertainment force in the country, as it acquired KakaoPage, KakaoM ― music distribution business ― back to back last year, following the firm's previous acquisition of Melon Company, Korea's largest music streaming service in July, 2021. Kakao purchased a 76.4 percent stake of Melon Company's operator Loen Entertainment at 1.87 trillion won ($1.4 billion) in 2016, yet Melon Company was split-off from Kakao in 2021, only to be acquired by Kakao Entertainment in the same year. The firm also acquired Antenna, a major entertainment agency, in late 2021.
Besides those, Kakao Entertainment aggressively pursued other M&As throughout last year, acquiring U.S.-headquartered Tapas and Radish Media, along with several media-related companies, snowballing its corporate size and value.
Since the firm attracted 1.15 trillion won ($880 million) worth of investments from Saudi Arabian sovereign wealth fund, PIF, and Singaporean sovereign fund, GIC, in January this year, the entertainment affiliate of the big tech seems to be considering its corporate value has risen enough to knock on the door of local bourse.
However, its course towards an IPO will be dependent on how the current entanglement surrounding SM Entertainment rolls out. Kakao agreed to purchase a 9.05 percent stake of SM in January this year for a strategic partnership. Kakao being the largest shareholder of Kakao Entertainment, market watchers anticipated that Kakao would transfer the SM stake to Kakao Entertainment.
Yet, SM founder Lee Soo-man filed an injunction in early February, asking the court to stop Kakao's plan to acquire the SM stake. The first trial of the injunction was held on Wednesday, and it is expected the final ruling will be out by early March.