Kakao to suspend further IPOs as it grapples with confidence issue

2022.01.14 12:06:33 | 2022.01.14 12:44:19

[Photo provided by Kakao Corp.]이미지 확대

[Photo provided by Kakao Corp.]

The ever-enlarging Kakao empire humbled by its first major internal strife and confidence issue is suspending public offerings of its units including this year’s candidates Kakao Mobility and Kakao Entertainment with a combined valuation 10 trillion won ($84 billion) to strengthen corporate guidelines in hopes to restore trust from employees, shareholders, and consumers.

Kakao Corp. announced on Thursday that it will stop listing process of its subsidiaries – Kakao Bank, Kakao Pay, and Kakao Games – and review other candidates for public offerings.

The latest announcement was made after the company has been questioned for abuse of dominant influence amid ever-sprawling business sphere.

Kakao issued an apology in October last year regarding its abusive market dominance that threatened the livelihood of small, self-employed mom-and-pop businesses after the government has warned of stricter regulations on big tech companies’ business expansion.

Its mobility platform operating subsidiary Kakao Mobility in the process of selecting its lead manager in August last year temporarily halted the IPO process. The investment bank industry has estimated Kakao Mobility’s corporate value to be between 6 trillion won and 7 trillion won, but there is no fixed date for the resumption of the IPO process.

Kakao Entertainment was another name in the dugout readying to go public. It was officially launched last year as Kakao Corp.’s content subsidiary from the merger of Kakao’s webtoon and web novel unit Kakao Page and its talent management and content production unit Kakao M.

Kakao has been also under criticism over executives’ moral hazard issues, most recently regarding massive selling of shares by Kakao Pay’s senior executives only a month after its listing last year.

Kakao on Thursday unveiled new guidelines drafted by its Corporate Alignment Center (CAC) regarding selloffs by executives, to be effective immediately. Executives of all Kakao subsidiaries are now prohibited from selling their stocks for one year after listing while CEOs are prohibited for two years. This applies to shares that were acquired upon exercise of stock options.

Kakao also prohibits the joint selling of stocks during this blackout period. The company also plans to set up “executives’ stock risk” system where stock selling must be reported one month prior even after the blackout period ends.

Kakao shares were down 2.3 percent at 94,500 won on Friday morning, while its listed subsidiaries Kakao Bank lost more than 4 percent, Kakao Games 0.7 percent and Kakao Pay more than 2 percent.

By Jin Young-tae and Susan Lee

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