January 12, 2023 , SEOUL – South Korean tech conglomerate Kakao Corp said on Thursday that its unit Kakao Entertainment had secured a 1.2 trillion won investment from leading sovereign wealth funds.
The move, which Kakao said was the largest overseas investment in a South Korean content company, signals investors’ bullish outlook for the growth potential of Korean content and its “recession-proof” tendencies when a weak economic outlook has dried up liquidity in many other sectors, analysts said.
Singapore’s GIC and Saudi Arabia’s Public Investment Fund (PIF) decided to each invest 600 billion won (S$641 million) in the entertainment firm, local newspaper Korea Economic Daily reported on Thursday, citing unnamed investment banking sources.
Kakao, however, did not name the sovereign wealth funds in its statement. GIC and PIF did not immediately comment.
“It is significant that we were able to secure funds of this scale at a time when both the Korean and global markets face a lot of uncertainty and investment sentiment is weak,” Kakao chief investment officer Bae Jae-hyun said.
Unlisted Kakao Entertainment has a business portfolio ranging from K-pop to shows and movies, and content such as online comics called webtoons and serial Web novels. It will use the capital to expand its content.
“Webtoons and Web novels are steadily being turned into successful dramas and other formats, so investors think this is good value and timing to invest in an intellectual property holder,” said Daol Investment & Securities analyst Kim Jin-woo.
“Having secured funds, Kakao Entertainment may seek to strengthen its artist line-up, wchich that can better target overseas markets via M&A (mergers and acquisitions) or other ways.”
The deal follows Saudi Crown Prince Mohammed bin Salman’s much-hyped visit to Seoul in November, which local media reported could precede a raft of investment deals for South Korean conglomerates worth US$30 billion.
Saudi Arabia has been beefing up investment and business ties with South Korean companies, becoming a major shareholder of NCSoft as well as Tokyo-listed Nexon. The kingdom is pushing to lower its reliance on oil exports, and has named content businesses, including storytelling, video games and e-sports, as possible engines of growth.