Kakao Entertainment's Indonesian Head Also Resigns... Overseas Executive Reshuffle Ahead of IPO

Change of Head of Indonesian Corporation... Restructuring of North American Corporation Executives
Listing Visibility through SM Acquisition... Moving Towards Management Efficiency...

Kakao Entertainment has replaced the head of its Indonesian subsidiary. Following a major reshuffle of key executives in its North American subsidiary, the company is reorganizing leadership in its overseas subsidiaries. This is seen as a move to improve management efficiency as plans for an initial public offering (IPO) have accelerated with the acquisition of SM Entertainment (SM).

Recently, Kakao Entertainment's Indonesian subsidiary has been overseen by Kang Jeong-gu, Head of Global Business and ASEAN Business General Manager. The former head of the Indonesian subsidiary, Seong Jin-il, left the company at the end of last year. A Kakao Entertainment official stated, "He resigned due to health reasons."

Former head Seong founded Neobazar in 2015. He operated the webtoon platform 'Webcomics' in Indonesia, which was acquired by Kakao Entertainment in 2018. Since then, Seong led Kakao Entertainment's Indonesian subsidiary.

Kakao Entertainment also made significant changes to the North American subsidiary's executive team. Earlier this year, Tapas Entertainment shifted from a co-CEO system with Kim Chang-won and Park Jong-cheol to a sole CEO system under Park. Former CEO Kim, who concurrently served as Kakao Entertainment's Chief Strategy Officer (CSO), resigned. Kim is the founder of Tapas, a North American webtoon platform acquired by Kakao Entertainment in 2021. Tapas merged with Radish, a North American web novel platform acquired around the same time, to launch Tapas Entertainment.

At the end of last year, Lee Seung-yoon, founder of Radish, stepped down as CEO. Ben Sternberg, Radish's Chief Financial Officer (CFO), and Taylor Carlson, Chief Operating Officer (COO), also left the company. Since then, Kang has taken on the role of COO at Tapas Entertainment as well.

The reorganization of overseas subsidiary executives is aimed at improving management efficiency. Although the company has grown through successive mergers and acquisitions (M&A), losses in overseas operations have increased. Kakao Entertainment has a total of 15 subsidiaries overseas, including in China, Indonesia, Japan, Hong Kong, and Thailand. These overseas subsidiaries recorded a net loss of 25.4 billion KRW in 2021. A Kakao Entertainment official explained, "With increasing internal and external uncertainties, we are considering management efficiency globally and plan to focus business efforts on the North American and Thai subsidiaries."

There is also analysis that this move aims to increase corporate value as the acquisition of SM has laid the groundwork for listing. Kakao Entertainment began preparing for listing two years ago but postponed it due to a lack of content that could sufficiently justify its corporate value and a sluggish stock market.

Recently, as Kakao decided to take control of SM's management rights, the pace of Kakao Entertainment's IPO is expected to accelerate. When Kakao Entertainment secured an investment of 1.2 trillion KRW earlier this year, its corporate value was estimated at about 11 trillion KRW, but with the acquisition of SM, it is projected to rise to around 25 trillion KRW. This is because combining SM's intellectual property (IP), which has a global fandom, with Kakao Entertainment's IP business expertise is expected to create significant synergy. Kakao Entertainment also plans to establish a joint venture with SM in the United States, indicating the need to reorganize overseas operations following the acquisition. An investment banking industry insider said, "Kakao Entertainment is the largest unlisted company within the Kakao group, and its IPO momentum has just begun. After securing stable management rights of SM, it is expected to focus on cost efficiency and strengthening core businesses to increase corporate value."