Google to invest $270 mn in Kakao Mobility with Carlyle

Google Inc. is planning to invest around $270 million in Kakao Mobility Corp., the transportation arm of South Korea's No. 1 messaging operator Kakao Corp., in a pre-IPO placement.

According to investment banking sources on Jan. 29, Google has decided to participate in Kakao Mobility's 300 billion won ($270 million) third-party allotment with a global private equity firm. 

The US-based Carlyle Group is most likely to be the participant, in which case, the private equity firm and Google will each commit 200 billion won ($180 million) and 100 billion won, respectively.

Ahead of the deal, Kakao Mobility’s enterprise value was placed at around 3 trillion won ($2.7 billion). The involved parties are currently fine-tuning the details for the deal, which is expected to wrap up in a few weeks.

Earlier, it was reported that Kakao Mobility is in talks with Google over potential partnership opportunities, including equity investments, ahead of its planned listing this year.

Waymo, the autonomous driving arm of Google, is likely to lead the investment. The company began as a self-driving car project in Google but spun off to become a subsidiary of Alphabet Inc., the parent company of Google, in 2016. The company raised around 2.7 trillion won ($2.4 billion) last year and has actively explored collaboration opportunities with leading mobility firms to secure driving data related to autonomous driving.

Kakao anticipates working closely with Waymo on autonomous driving technology, a key component in the Mobility as a Service (MaaS) platform that Kakao Mobility is pushing for. The Korean mobility company aspires to provide all transportation-related services via a single app, Kakao T.

Last year, Kakao Mobility received approval from the Ministry of Land, Infrastructure and Transport to test operate its own autonomous driving technology.

Meanwhile, Carlyle Group has been an active investor in Korea. The PE firm has invested around 400 billion won in KB Financial Group and is currently in the final stages of talks to buy Korea’s No. 2 bakery chain Tous Les Jours.

It is understood that Carlyle Group held Kakao Mobility's position as a leading market player in high regard. The Korean mobility firm has an 80% share of the country’s taxi-hailing market. Its transportation service app Kakao T has around 27 million users, meaning that around 72% of the population between ages 20-69 have signed up for the service.

In 2017, Kakao Mobility raised a total of 500 billion won from private equity firms TPG and Korea Investment Partners as well as Japan-based Orix, which placed the company's enterprise value at around 1.5 trillion won. Since then, the company's enterprise value has more than doubled.

COMPETITION HEATS UP AMONG KOREAN MOBILITY FIRMS

The rise of mobility services has fueled competition among domestic mobility firms. Last year, SK Telecom partnered with the ride-hailing platform Uber Technologies Inc. and launched T Map Mobility Co. SKT is currently raising funds from financial investors at home and abroad.

Meanwhile, domestic car-sharing startup Socar achieved unicorn status after receiving a 50 billion won funding from domestic private equity firm SG Private Equity. The company has been steadily increasing its presence in the domestic market by foraying into new businesses, including designated driver service as well as an online used car sale platform.

Write to Chae-yeon Kim and Jun-ho Cha at why29@hankyung.com
Danbee Lee edited this article.