Kakao Games’ Largest Shareholder Changes to LINE Yahoo... All-Out Effort to Secure Funds (Comprehensive)

Securing 300 Billion Won Through Capital Increase and Convertible Bonds
Kakao Embarks on Streamlining... "Supporting Mid-to-Long-Term Growth"

Kakao is stepping back from its management control over Kakao Games, a subsidiary that has been operating at a loss. Kakao Games will welcome a private equity fund backed by Japan's LINE Yahoo as its new largest shareholder, enabling it to secure approximately 300 billion won in new funds.

On March 25, Kakao Games announced that LAAA Investment, a special purpose company funded by LINE Yahoo, will acquire a portion of the company's shares and will also participate in a third-party allotment capital increase worth 240 billion won and a convertible bond (CB) issuance worth 60 billion won. Once the transaction is completed in May, LINE Yahoo will become the largest shareholder, while Kakao will step down to become the second-largest shareholder. The agreement guarantees job security and the succession of existing employment conditions for all employees.

Through this transaction, Kakao Games will be able to secure approximately 300 billion won in cash. The company explained that the capital increase and convertible bond issuance are intended to “enhance financial stability and raise funds for growth investments.”

A Kakao Games official stated, “With the funds raised, we will accelerate efforts to enhance global competitiveness and establish a foundation for mid-to-long-term growth. We will expand our collaboration platform with the new largest shareholder, especially in key global markets such as Japan, and strengthen our competitiveness based on Kakao Games’ development and service capabilities.”

Kakao’s decision to transfer its Kakao Games stake to LINE Yahoo is being interpreted as part of its so-called “streamlining” strategy to reduce the number of subsidiaries. Speculation about Kakao selling Kakao Games has been circulating since last year, as the company began reorganizing its group structure to address the side effects of its “octopus-style management” and excessive expansion.

Shin Hana, CEO of Kakao, who took office in March 2024, has pursued a management strategy focused on core competencies rather than indiscriminate expansion. Immediately after Shin became CEO, the number of Kakao subsidiaries dropped from 132 to 99 as of October last year. On February 11, Kakao’s board of directors resolved to reappoint Shin for another two-year term, a decision that is expected to be finalized at the regular shareholders’ meeting the following day.

This sale is closely related to the continued business downturn at Kakao Games. Kakao Games has posted operating losses for five consecutive quarters since the fourth quarter of 2024, with cumulative operating losses reaching 4.58 billion won over that period. In addition, quarterly revenue has continued to decline, leading to assessments that the company’s overall growth momentum has disappeared. Last year, Kakao Games’ revenue was 98.9 billion won, a 26% decrease compared to the previous year.

A Kakao Games official commented, “Kakao will continue its partnership with Kakao Games by reinvesting a portion of the proceeds from the sale of existing shares in this transaction. This will support the stable operation of the company’s business and strengthen the foundation for mid-to-long-term growth.”

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