Kakao Mobility receives $438 mn investment from U.S. PEF

2017.06.30 15:51:35

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Kakao Mobility, a car-hailing service run by Korea’s leading mobile messaging service company Kakao Corp., has attracted investment of more than 500 billion won ($438 million) from overseas private equity funds, giving it more time to seek growth model.

Kakao Mobility’s representative taxi-hailing service Kakao Taxi boasts 15 million subscribers and an average of 1.5 million calls per day. However it has been struggling to find profit generating models as its previous attempts including placing advertisements in its application failed to bring out satisfactory results.

The company wants to run a paid service where users who pay an extra charge could receive faster service than others to share profit with drivers. But the concept is illegal in Korea. SK Telecom’s cab-hailing app T-map Taxi that experimented with surcharge of up to 5,000 won for preferential service was stopped by the government citing violation with local rules. The government argues the move would end up burdening consumers.

Charging extra hailing fee is also unthinkable for Kakao Taxi as it would lose its appeal against general cabs.

“We are looking into various means in order to bolster profit,” said a company official.

Kakao Mobility, a wholly owned subsidiary of Kakao, operates Kakao Taxi, chauffeur service Kakao Driver, navigation service Kakao Navi and parking space reservation service. According to sources, Kakao received 500 billion won in investment from U.S.-based private equity firm TPG Capital on condition of selling a 30 percent stake in Kakao Mobility to the firm. Japanese private equity ORIX and Korea Investment Partners are also considering an investment of less than 100 billion won.

By Oh Chan-jong

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