Key points
- Kakao owns 57.18 percent of Kakao Mobility and opposes its US listing.
- The proposed structure would let TPG sell existing shares, rather than raise new money.
- Kakao Mobility filed a confidential draft with the SEC on July 2.
- The offering targeted about $1 billion in New York by year-end.
On September 22, Kakao (035720) said it opposes a plan to list its ride-hailing company, Kakao Mobility (카카오모빌리티), in the United States. Kakao owns 57.18 percent of Kakao Mobility, so it's the majority owner, and its objection can hold up the deal.
The listing has been driven by TPG, a US private equity firm that's Kakao Mobility's second-largest shareholder with a stake of about 29 percent. TPG invested almost ten years ago and wants to sell, and the US listing is how it planned to do that. Kakao Mobility quietly filed a draft registration with the US Securities and Exchange Commission on July 2, Money Today (머니투데이) reported. The offering was reported to be targeting about $1 billion in New York by year-end.
An American depositary receipt, or ADR, lets US investors buy a piece of a foreign company without trading on its home market. You can read how Korean ADRs work here. In the structure Kakao opposed, the ADRs would be backed by shares TPG already owns. That would make it a secondary sale. Proceeds would go to TPG rather than Kakao Mobility.
That's the heart of Kakao's objection. "It is hard to see a specific financial investor cashing out its stake as returning any economic benefit to Kakao's ordinary shareholders," the board said in its resolution. Kakao added that the listing would bring no new money into Kakao Mobility or into Kakao itself, and that having the parent and the subsidiary both trade publicly could widen the discount on Kakao's own stock, Hankyung (한국경제) reported.
Kakao did not reject a sale by TPG outright. "This does not deny that financial investors such as TPG need to recover their investment," a Kakao official said. The company added that it could look at the plan again if the listing structure changed, if the economic benefit to Kakao and its ordinary shareholders grew, or if the regulator asked. Kakao pointed to other routes, like buying back TPG's stake or selling it to a third party, or issuing new shares so money would also flow into Kakao Mobility.
Kakao's 57.18 percent stake is why the objection matters. TPG cannot realistically complete an ADR listing without cooperation from Kakao Mobility and its controlling shareholder. Kakao's board opposition makes the proposed structure much harder to execute, though it does not rule out a revised deal.
Kakao Mobility runs KakaoT (카카오T), a major ride-hailing and taxi platform in Korea. Kakao knows this fight from the other side. It spent years splitting off and listing its own units like KakaoBank and KakaoPay, and its shareholders complained that each new listing pulled value out of the parent. This time Kakao is the one arguing that a separate listing would hurt ordinary shareholders.
TPG's potential exit is delayed. It invested in Kakao Mobility almost a decade ago, and the US ADR route now faces a major obstacle.
Kakao's board resolution is translated from Korean.
