Sale Withdrawn, but... Private Equity Influence on Kakao Mobility Remains Strong

On the 11th, the Kakao Community Union Crew Union held a press conference regarding the sale of Kakao Mobility at Sangyeonjae in Jung-gu, Seoul. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Kang Nahum] As Kakao has decided to withdraw the sale of Kakao Mobility and remain the largest shareholder, industry attention is focused on whether there will be changes to the rest of the shareholding structure. With expectations rising that MBK Partners will take over the baton from TPG Consortium and Carlyle Group, the 2nd and 3rd largest shareholders, and participate as major shareholders, the possibility that Kakao Mobility will remain under the influence of private equity funds has increased.

According to the industry on the 19th, although Kakao has withdrawn the sale of its stake in Kakao Mobility, discussions on share sales among financial investors (FIs) are reportedly ongoing. As of the end of last year, Kakao Mobility’s shares were composed of Kakao 57.6%, TPG 29.0%, and Carlyle 6.2%.

Kakao is known to have signed an agreement when attracting TPG’s investment, promising that within a certain period after the investment, the invested shares could be monetized through an initial public offering (IPO) or similar means. Typically, the exit period for private equity funds is five years, and for TPG to realize this, MBK Partners?who has shown the most interest in Kakao Mobility shares?inevitably becomes the negotiation partner at this point.

Ultimately, even if Kakao Mobility parts ways with TPG, the likelihood that private equity funds will remain major shareholders has increased, and industry insiders predict that shareholder pressure to maximize profits will continue.

In fact, the controversial introduction of ‘Smart Call’ and the fare increase were reportedly heavily influenced by FIs such as TPG. Smart Call was a fare policy implemented by Kakao Mobility, an artificial intelligence (AI) dispatch system that increased the success rate of taxi calls.

Last year, Kakao Mobility raised the taxi call fee, which had been operated as a flat rate of 1,000 won (2,000 won at night), to a maximum of 5,000 won by diversifying the price range under the name ‘Smart Call.’ However, the service was abolished after strong public resistance claiming “Kakao is raising taxi fares that even the government does not raise.” At the time of abolition, there was an evaluation that Kakao Mobility, swayed by FIs, hastily attempted financial restructuring and took the reckless step of raising Smart Call prices.

An industry insider said, “As long as private equity funds remain major shareholders, improving performance and achieving an IPO are essential tasks,” adding, “Policies conflicting with win-win measures, such as raising platform usage fees including taxi call fees, will inevitably have to be introduced.”

Labor-management conflict is also a concern. Kakao Mobility employees have become more united than ever, with union membership exceeding 80% amid this sale issue. An industry insider said, “Past controversies over mobility’s impact on local businesses arose when major shareholders and management implemented excessive commission and fare policies under the pretext of financial restructuring and IPO,” adding, “If management introduces policies contrary to Kakao Mobility’s social responsibility, conflicts between labor and management could occur.”

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