Stepping towards Holding Company
Kakao will transfer its game business to its subsidiary Kakao Games and merge it into its holding company, Kakao Games Holdings. This move aims at boosting the efficiency of the game business, which is its biggest 'cash cow', and will make the governance structure efficient. Experts evaluated that Kakao became one step closer to converting into a holding company.
On August 17, Kakao announced that it will integrate its game business into its subsidiary, Kakao Games, and Kakao Games will be in charge of various game publishing (services and distribution) and business utilizing intellectual properties of Kakao Friends. Namkung Hoon, CEO of Kakao Games, said, "We will secure competitive intellectual property rights as well as Kakao Friends, and make profits in various countries by raising our own development capabilities."
As Kakao Games expanded its size by taking over the game division from Kakao, it is likely that its IPO will pick up speed. Kakao is said to have set its internal policy that Kakao Games will be listed on the stock market only if the corporate value of Kakao Games exceeds 500 billion won. So, the success of the mobile game 'Yin Yang Sha for kakao' which is considered one of the most anticipated games of the year will affect an IPO time for Kakao Games.
At the same time, Kakao will merge with Kakao Games Holdings (formerly known as K-Venture Group), a holding company with a 41.8% stake in Kakao Games. The governance structure where Kakao controls Kakao Games Holdings and Kakao Games Holdings controls Kakao Games will be simplified into one where Kakao governs Kakao Games. Kakao will hand over its goodwill to Kakao Games, raising its stake in Kakao Games to 80% by receiving 35,000 new shares (220.9 billion won). This means that Kim Beom-soo, chairman of the board of directors and the largest shareholder of Kakao took stronger control of the game business.
The separation of Kakao Mobility and the reorganization of the corporate governance of the game business are strengthening a rumor that Kakao will transform into a holding company structure.
The industry and securities companies think more about a scenario that K Cube Holdings which chairman Kim owns a 100% stake in merges with Kakao Holding Company after dividing Kakao into an operating company and an investment company through a spin-off. Then, chairman Kim will be able to control more than 80 affiliates vertically through Kakao Holding Company.