[Edaily Reporter Lee So-Hyun ] Kakao(035720)has put the brakes on the American Depositary Receipt (ADR) listing that TPG, the second-largest shareholder of Kakao Mobility, has been pursuing. The company determined that, under the current structure—which liquidates only TPG’s stake without bringing in new capital for Kakao and Kakao Mobility—there would be insufficient tangible benefits for general shareholders.

According to a response to an inquiry disclosure issued by Kakao after the market closed on the 23rd, the board of directors resolved to oppose the Kakao Mobility ADR listing structure currently under review. Although the company had stated as recently as the 18th that “nothing has been finalized,” it solidified its position just four days later.

“No Money Comes into the Company; Only TPG Recoups Its Investment”

The current plan differs from a typical initial public offering (IPO), in which Kakao Mobility raises funds by issuing new shares. Instead, it involves issuing ADRs based solely on TPG’s existing stake in Kakao Mobility to make the shares tradable in the U.S. market. The Shareholder Value Enhancement Committee filed the relevant registration statement (Form F-1) with the U.S. Securities and Exchange Commission (SEC) on July 2 on a confidential basis.

Kakao’s board of directors determined that, under this scenario, no new funds would flow into Kakao Mobility or Kakao, while the benefits would be concentrated on the recovery of investments by a specific financial investor (FI).

Other reasons for opposition included the dispersion of investment demand between Kakao and Kakao Mobility, the widening discount on Kakao’s net asset value (NAV) due to dual listings, and the potential for conflicts of interest among shareholders of both companies. The board also considered that while Kakao would gain no financial resources from the listing, it would still be subject to liabilities under U.S. securities laws.

Differences in stance emerged in May… CEO Ryu Geung-seon also opposed the timeline and dual listing

Prior to this decision, disagreements over the details of the IPO had already emerged within Kakao Mobility.

In April, Kakao Mobility established a “Shareholder Value Enhancement Committee” to discuss matters such as the initial public offering (IPO) and the recovery of invested capital. In May, the committee held a series of discussions not only on the selection of the lead underwriter but also on the process for consulting with the parent company regarding shareholder return policies, regulations on dual listings, the composition of the board of directors after the listing, and the target timeline for the listing. It subsequently approved the SEC registration and listing application, the delegation of authority for the sale of existing shares, the appointment of an underwriting syndicate, and the registration and sale of American Depositary Shares (ADS).

At the time, Ryu Geung-seon, CEO of Kakao Mobility, supported the listing procedures—including SEC registration and the listing application—but voted against the consultation process regarding the parent company’s shareholder return policy, dual-listing regulations, the composition of the board of directors after the listing, and the target listing schedule. CEO Ryu subsequently stepped down from the committee on June 24, citing “personal reasons.”

The IPO Itself Remains on the Table… Redesign of TPG’s Exit Strategy Inevitable

As of the end of June, Kakao held a 57.18% stake in Kakao Mobility, making it the largest shareholder, while Kaki Holdings, part of the TPG consortium, held 14.28%, making it the second-largest shareholder. Financial investors (FIs) such as Kilometer Holdings (6.17%) and Mobility Coin Invest (5.34%) are also major shareholders.

The TPG consortium invested 500 billion won in Kakao Mobility in 2017 and an additional 130.7 billion won in 2021, but has been unable to recoup its investment for nine years. As a domestic IPO and the sale of shares have repeatedly failed to materialize, a U.S. ADR listing has been pursued as a new exit strategy.

Kakao has not fundamentally blocked the U.S. listing itself. The company’s position is that it may reconsider the plan if the listing structure or the economic benefits for Kakao and its general shareholders change.

Consequently, the original ADR listing plan—which centered on liquidating TPG’s existing stake—has inevitably had to be revised. The success of Kakao Mobility’s U.S. listing will likely hinge on whether a new structure can be devised that simultaneously allows financial investors (FIs) to recoup their investments and protects Kakao’s common shareholders.