Expanded Steps into Affiliates... Kakao Finance Line 'Gap'

Kakao Senior Finance and Investment Executives Referred to Prosecutors
Gap in Strategy Development for Investment and M&A Roles

The financial line of Kakao, which was expanding its footprint into group affiliates, is currently vacant. This follows the referral to the prosecution on suspicion of market manipulation during the acquisition process of SM Entertainment (SM). As those who manage the company’s treasury and set the overall vision for the group have vacated their positions, gaps have emerged in Kakao’s growth strategy.

On the 26th, the Financial Supervisory Service’s Capital Markets Special Judicial Police (Special Judicial Police) announced that they would forward Bae Jae-hyun, Kakao’s Chief Investment Officer, Kang Ho-jung, Vice President and Head of Kakao’s Investment Strategy Office, and Lee Junho, Head of Investment Strategy at Kakao Entertainment, to the prosecution with an indictment recommendation.

CEO Bae oversees investments across the entire Kakao group. He is responsible for the investment sector within the CA Council, which coordinates the group’s overall direction. He serves not only as an inside director of Kakao but also as a non-executive director at Kakao Mobility, Kakao Style, and an inside director at Kakao Piccoma. Until last year, he participated in the boards of Kakao Mobility and Kakao Style, and from this year, his role expanded to Kakao and Kakao Piccoma.

Vice President Kang is a key executive who closely supports CEO Bae. He also participates in affiliates as a non-executive director at Kakao Space, auditor at Kakao Mobility, and auditor at Kakao Style.

Head Lee serves on the boards of 12 Kakao Entertainment affiliates. He is the CEO and chairman of the board of VAST, the entertainment agency to which Hyun Bin belongs, and a non-executive director at 12 agencies and production companies including Starship Entertainment, BH Entertainment, Soop Entertainment, and Film Company Wolgwang. Lee is a close associate of Kim Sung-soo, CEO of Kakao Entertainment, and moved to Kakao together from CJ ENM.

Separately from the market manipulation allegations, former Kakao Head of Finance Group (Vice President) Kim Ki-hong was disciplined with a three-month suspension for using the corporate card to purchase game items worth approximately 100 million KRW. Former Vice President Kim is a non-executive director at Kakao Games. He is also listed as a non-executive director at K&Works and DK Tech, Kakao affiliates specializing in IT services and solution development.

Until now, senior executives in charge of Kakao’s finance and investment have held critical roles in finding growth paths for affiliates through investments and mergers & acquisitions (M&A). The entertainment, mobility, and content affiliates where they are positioned are areas Kakao has consistently invested in and nurtured as growth engines. This also signifies the trust placed in them by Kim Beom-su, Kakao’s founder and head of the Future Initiative Center.

With the financial line, which held such important roles, consecutively stepping away from their duties, warning lights have turned on regarding Kakao’s strategic planning. The gap is not only in managing the company’s treasury but also in the long-term role of setting investment and M&A strategies. An industry insider said, "Kakao has not been able to respond quickly when new technologies emerge or industry trends change due to internal and external issues. Given the fast-changing nature of the industry, it is regrettable that this incident will once again hold them back."

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