South Korea's Kakao Entertainment secures $1.3b investment from sovereign wealth funds

SEOUL — South Korean tech conglomerate Kakao Corp said on Thursday (Jan 12) unit Kakao Entertainment secured a 1.2 trillion won (S$1.3 billion) investment from leading sovereign wealth funds.

The move, which Kakao said was the largest overseas investment in a South Korean content company, signals investors' bullish outlook for Korean contents' growth potential and its "recession-proof" tendencies when weak a economic outlook has dried up liquidity in many other sectors, analysts said.

Singapore's GIC and Saudi Arabia's Public Investment Fund (PIF) decided to each invest 600 billion won in the entertainment firm, local newspaper Korea Economic Daily reported on Thursday, citing unnamed investment banking sources.

Kakao, however, did not name the sovereign wealth funds in its statement. GIC and PIF did not immediately comment.

Kakao Corp shares rose one per cent in early morning trade, outperforming a 0.2 per cent rise in the wider market.

"It's significant that we were able to secure funds of this scale at a time when both the Korean and global markets face a lot of uncertainty and investment sentiment is weak," Kakao Chief Investment Officer Bae Jae-hyun said.

Unlisted Kakao Entertainment has a business portfolio ranging from K-Pop — including artist management — to shows, movies, and online-targeted, comparatively low-cost content such as comics called webtoons and serial web novels.

"Webtoons and web novels are steadily being turned into successful dramas and other formats, so investors think this is good value and timing to invest in an intellectual property holder," said Kim Jin-woo, analyst at Daol Investment & Securities.

"Having secured funds, Kakao Entertainment may seek to strengthen its artist lineup that can better target overseas markets via M&A or other ways."

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