[Edaily Reporter Lee So-Hyun ] Kakao(035720)has begun efforts to persuade overseas investors ahead of its spin-off into Kakao AI and Kakao X. Following direct meetings with domestic minority shareholders and securities analysts to explain the necessity of the spin-off and its growth strategy, the company has expanded its outreach to include overseas institutional investors. Ahead of the shareholders’ meeting in January to approve the spin-off, Kakao is focusing on demonstrating to the market that the spin-off can actually lead to enhanced shareholder value.

According to Kakao on the 11th, CEO Jeong Shin-ah and Kim Do-young, CEO-designate of Kakao X, will meet with about 10 overseas investors and institutions in Hong Kong and Singapore from today through the 12th. They plan to explain the background of the spin-off, the roles of Kakao AI and Kakao X, and their post-spin-off growth strategies, while also listening to investor feedback.

Since announcing the spin-off last August, Kakao has been working hard to persuade its shareholders. The company held two meetings with minority shareholders in September and October and disclosed post-spin-off growth plans for each business unit at a joint analyst meeting attended by executives from major subsidiaries. This time, Kakao has expanded its outreach to include overseas institutional investors. Given that foreign ownership stands at approximately 29%, gaining the understanding of overseas shareholders is a key challenge in the spin-off process.

This marks the second time CEO Jeong has met with overseas investors in person, following a similar visit last year. Last September, at the Goldman Sachs Asia Leaders Conference in Hong Kong, a Kakao CEO attended an overseas investor relations (IR) event in person for the first time since the company’s founding. While the focus at that time was on growth strategies—such as the KakaoTalk redesign and collaboration with OpenAI—the key agenda items this time are the spin-off and the company’s post-spin-off enterprise value.

The key challenge is how to increase the enterprise value of each company after the split. Kakao AI must demonstrate growth potential and profitability by integrating AI, advertising, and commerce around KakaoTalk. Kakao X must boost the value of its affiliates in areas such as fintech, content, and mobility, while also addressing concerns that a subsidiary-centric business structure could become a new factor discounting its enterprise value.

Kakao has also strengthened its shareholder return and capital allocation plans. Of the 300 billion won in share buybacks and cancellations originally scheduled to be executed by Kakao X after the split, 150 billion won will be brought forward and executed prior to the split. An additional 263.6 billion won in cash will be allocated to Kakao AI, increasing its net assets from approximately 2.9 trillion won to 3.2 trillion won. The aim is to alleviate market concerns by implementing shareholder return measures before the spin-off and securing growth capital for both companies.

Changes to the environment surrounding next year’s annual general meeting (AGM) also present a variable. While Kakao already implements electronic voting, starting January 1 of next year, listed companies with assets of 2 trillion won or more will be required to hold electronic AGMs in addition to in-person meetings. Shareholders will be able to attend online in real time to ask questions and exercise their voting rights. As this requirement also applies to Kakao’s extraordinary general meeting scheduled for January 15 of next year, the barrier to participation for minority shareholders is expected to be lowered.

A corporate spin-off is a special resolution that requires the approval of at least two-thirds of the voting rights of shareholders present and at least one-third of the total issued shares. This is why Kakao must secure the support of not only domestic minority shareholders but also overseas institutional investors. This overseas investor relations (IR) event is seen not merely as an opportunity to explain the spin-off structure, but also as a process to build confidence that the corporate value of each company can be enhanced after the split.

A Kakao official stated, “We will directly assess the concerns of overseas investors and the market’s perspective, and faithfully reflect the diverse opinions gathered on-site in our future market communications.”