The Betrayal of KakaoPay Executives Who Claimed "No Muk-twi in China"

Concerns Over Alipay, the Second Largest Shareholder, Running Away with Funds
Management Sells Off Large Shares First
Stock Price Plummets 9%, Short Selling Surges by 27.1 Billion Won

Ryu Young-jun, former CEO of Kakao Pay, who became co-CEO of Kakao. On the 10th, about a month after Kakao Pay went public, CEO Ryu sold a large number of Kakao Pay shares through off-hours trading.

[Asia Economy Reporter Junho Hwang] "I cannot be 100% certain, but I expect there will be no intention to sell in the short term."

This was the response from then-CEO Ryu Young-joon on October 25 regarding concerns about the overhang (potential excess supply that could flood the market at any time) from Alipay, the second-largest shareholder, ahead of Kakao Pay's IPO. However, the real wild card that investors should have been worried about was none other than CEO Ryu himself.

According to the Financial Supervisory Service on the 14th, CEO Ryu disclosed on the 10th that he sold 230,000 shares of company stock at 204,017 KRW per share, realizing a profit of approximately 46.9 billion KRW. That was not all. Vice presidents in charge of various divisions, including Naho-yeol (35,800 shares), Shin Won-geun (30,000 shares), Lee Ji-hong (30,000 shares), Lee Jin (75,193 shares), Jang Ki-joo (30,000 shares), Jeon Hyun-sung (5,000 shares), and Lee Seung-hyo (5,000 shares), all sold their holdings. The total amounted to 440,993 shares, worth about 90 billion KRW.

Despite the weekend in between, the stock price dropped more than 9% over two days following their sale disclosures. The market capitalization fell from 27.1815 trillion KRW to 25.0508 trillion KRW, a decrease of over 2 trillion KRW. In fact, 440,000 shares are not a large proportion of the total circulating shares. However, for investors who believed in the 'Kakao' brand and the management's long-term vision, this action by the executives was a bolt from the blue. They labeled the management’s share sales, including CEO Ryu’s sale just over a month after the IPO, as a 'muk-ttwi' (eat-and-run) and raised their voices calling it a 'moral hazard.'

In particular, CEO Ryu was the person who said at the time of the IPO, "Through 100% equal allocation, even stock beginners (Jurin-i) can invest in Kakao Pay," and expressed pride in this. Jurin-i who invested their pocket money believing in his rosy future were left looking up at the sky. Notably, the day of the share sale, the 10th, was the day Kakao Pay was included in the KOSPI 200. It was the day passive funds flowed in and the stock was included as a target for short selling. However, when the management sold their shares, foreign investors withdrew 39 billion KRW over two days. Short selling also amounted to 27.1 billion KRW.

The Alipay stake (currently 28.47%, with 10.65% under a six-month lock-up) could also be released at any time. The Korea Exchange classified Alipay’s shares as floating shares rather than fixed shares when including Kakao Pay in the KOSPI 200, meaning they can be sold at any time.

This content was produced with the assistance of AI translation services.