S Korea's Kakao Entertainment bags $966M investment from sovereign wealth funds


Leading sovereign wealth funds invested 1.2 trillion won ($966.27 million) in Kakao Entertainment, according to South Korean digital firm Kakao Corp.

The action, which according to Kakao was the largest overseas investment in a South Korean content company, signals investors' optimistic outlook for Korean content's growth potential and its "recession-proof" tendencies at a time when a bleak economic outlook has dried up liquidity in many other sectors, analysts said.

According to an article in the local daily Korea Economic Daily on Thursday, which cited anonymous investment banking sources, Singapore's GIC and Saudi Arabia's Public Investment Fund (PIF) have each decided to invest 600 billion won in the entertainment company.

But in its statement, Kakao omitted mentioning the sovereign wealth funds. GIC and PIF did not respond right away.

Early morning trading saw a 1% increase in Kakao Corp shares, outpacing the market as a whole's 0.2% increase.

"It's 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's commercial portfolio includes K-Pop, which includes artist management, as well as shows, films, and online-focused, reasonably priced material including serial web novels and webtoons.

"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 Kim Jin-woo, analyst at Daol Investment & Securities.

"Having secured funds, Kakao Entertainment may seek to strengthen its artist lineup that can better target overseas markets via M&A or other ways."

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