'Double Whammy' Kakao Mobility's Corporate Value Evaporates by 5 Trillion Won

[Asia Economy Reporter Park Soyeon] Kakao Mobility's corporate value has evaporated by about 5 trillion won. Following MBK Partners' withdrawal from the sale, the SK㈜ C&C data center fire incident has added insult to injury.

According to the investment banking (IB) industry on the 21st, the current value of Kakao Mobility on the unlisted trading platform Seoul Exchange Unlisted is 10,800 won per share. On Securities Plus Unlisted, it is traded at 11,000 won per share. The corporate value is estimated to be between 2.7513 trillion won and 2.8023 trillion won.

When MBK Partners was considering acquiring shares earlier this year, Kakao Mobility was valued at 31,381 won per share, approximately 8.5 trillion won in corporate value, but now its value has dropped to the 2 trillion won level.

Kakao Mobility is a mobility-specialized subsidiary spun off to expand mobility businesses such as taxi-hailing, designated driver services, and parking, starting with the taxi-hailing service Kakao Taxi in 2015. It grew rapidly after the physical division in 2017. In the first half of this year, during the partial sale of existing investors' shares, it was recognized with a corporate value of 8.5 trillion won. Kakao, holding 57.5% of the shares, is the largest shareholder of Kakao Mobility.

Kakao Mobility was a core subsidiary of Kakao preparing for an IPO since last year, but it became a headache for the group as it was engulfed in criticism over issues such as infringement on small businesses. Following the fare increase, Chairman Kim Beom-su appeared as a witness at the National Assembly audit last year, and this year, CEO Ryu Geung-seon of Kakao Mobility voluntarily appeared as a witness at the audit.

Kakao Mobility had been operating at a loss for years but turned profitable last year. Although 90% of taxi drivers nationwide use the Kakao T taxi service and over 30 million people, more than half of South Korea's population, use Kakao T services, profitability remains a challenge.

Last year, various strategies such as introducing a pro-membership system and changing the smart-hailing dynamic pricing plan were attempted to monetize, but they faced backlash as 'platform abuse.' The flower, snack, and salad delivery brokerage service for corporate clients was criticized for infringing on small businesses. This escalated into a crisis for the entire Kakao Group. This is the background behind Kakao's push to sell its mobility unit.

In this situation, Kakao attempted to sell its mobility unit but withdrew the sale due to social opposition. Since selling shares has become difficult for the time being, there is speculation that Kakao Mobility may turn to pursuing an initial public offering (IPO). It is known that Kakao guaranteed the recovery of investment funds through IPO or sale during the process of attracting foreign financial investors (FI). Whether an appropriate corporate value that satisfies investors can be recognized remains uncertain.

Considering the scale of compensation for damages caused by the recent server outage, Kakao Mobility's financial burden has increased further. Currently, the taxi industry claims that they suffered business losses amounting to up to several hundred thousand won due to the Kakao T service disruption. With regulations on platform companies, market stagnation, and the Kakao server outage incident overlapping, Kakao Mobility's IPO has become uncertain. An IB industry official said, "Given Kakao Mobility's current situation, the realization of stock options promised to employees and the recovery of investment funds by FIs are uncertain."

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