Kakao and TPG Announce Strategic Partnership to Establish Kakao Mobility
TPG-led consortium invests KRW 500 billion into Kakao Mobility for aggressive business expansion
[2017.06.30] Kakao, Korea’s largest online and mobile platform operator, and TPG, a global alternative asset firm, announced today a strategic partnership to establish the mobility-focused business Kakao Mobility as an independent entity. As part of the partnership, a TPG-led consortium will invest KRW 500 billion into Kakao Mobility to help scale the business, enhancing its ability to reach more customers with a broader range of innovative services.
As an independent entity, Kakao Mobility will provide the Kakao Taxi, Kakao Driver, and Kakao Navi services and introduce new services in the second half of this year, including a parking service. Kakao initially decided to spin off its mobility business and establish Kakao Mobility last month as part of its strategic move to pursue new growth in the mobility business through swift decision making and aggressive expansion. Mr. Joohwan Jung, previously the vice president of Kakao’s mobility business, has been appointed to serve as CEO of the new legal entity.
“As part of larger global trends, the traditional offline industry sector has been undergoing rapid transformation into developing online offerings, with the mobility business a particularly exciting and high-attention area,” said Joohwan Jung, CEO of Kakao Mobility. “We see infinite opportunities ahead, and will strive to create new value for both users and businesses across the mobility business through strategic partnerships and by securing the top talent.”
“Kakao Mobility has an innovative business model that is set to benefit from a rapidly emerging Korean mobility industry,” said Tim Dattels, Managing Partner of TPG Capital Asia. “For many years, across the firm’s platforms, we have been focused on identifying and partnering with disruptive companies similar to Kakao Mobility that are challenging, transforming, and evolving existing industries. We look forward to using this experience to help the newly-formed company grow.”
With the spinoff of the mobility business and new investment, Kakao plans to accelerate the growth and commercialization of Kakao Taxi, which currently receives up to 1.5 million calls daily. A corporate call taxi service will be introduced in the third quarter of this year, and advertisements on the Kakao Taxi app will also gradually be expanded. An automatic payment system via Kakao Pay is also under development in partnership with Korea Smart Card Corporation and global expansion will pick up in speed, similar to the collaboration that Kakao is doing in Japan with Japan Taxi. Kakao Taxi will also focus on refining and expanding its existing business models, such as test drives offered via partnerships with local and global car manufacturing companies, and the Kakao Taxi Black service.
Kakao Driver, which recently celebrated its first anniversary, will accelerate its growth with expanded marketing initiatives. The number of users for the service grew from 2.2 million in February 2016 to 2.7 million in June 2017, with almost 70% in return users within four weeks. Kakao is strengthening its efforts to grow with existing business partners and is exploring ways to offer unique benefits to both users and drivers.
Kakao will also continue its efforts to enhance Kakao Navi through big data. Navigation using real-time traffic information, prediction of traffic volume prior to holiday seasons, and recommendations of popular or frequently visited destinations will be a key focus for the service. As of June 2017, Kakao Navi has 10 million users, with the number of users and monthly usage having grown by 87% and 92%, respectively, since the service’s launch in February 2016.
The investment in Kakao Mobility reflects TPG’s thematic approach to partnering with companies that are finding creative ways to serve the needs and interests of today’s consumer, such as the firm’s investments in live entertainment company Cirque du Soleil, and leading sports and entertainment agency CAA. Headquartered in Fort Worth and San Francisco, TPG sits alongside some of the most innovative and disruptive companies that are transforming the world’s economy, giving the firm a unique view into the rapidly changing internet and digital media space. Select investments in the mobility sector include, Airbnb, Lynda.com, Spotify, Uber and Vice Media.
Kakao Mobility Service