Kakao board votes against Kakao Mobility's US listing structure

Calls TPG-driven plan detrimental to general shareholders

A Kakao T franchise taxi [Kakao Mobility]
A Kakao T franchise taxi [Kakao Mobility]

Kakao has moved to block its subsidiary Kakao Mobility from pursuing a US stock market listing, saying the current structure — designed primarily to help second-largest shareholder TPG recoup its investment — offers little benefit to ordinary shareholders.

Kakao announced Tuesday through a regulatory filing that its board had voted to oppose the American depositary receipt listing under the current structure.

Kakao Mobility had confidentially submitted a Form F-1 registration statement to the SEC in July for an ADR public offering. The plan involves issuing ADRs based on shares held by TPG, the private equity fund that is Kakao Mobility's second-largest shareholder.

Kakao Mobility currently operates a "shareholder value enhancement committee" in which TPG holds a majority of seats. That committee has been pushing the US ADR listing as a way for TPG and other financial investors to exit their positions.

Kakao, however, stepped in to oppose the move, concluding that the listing structure would not serve the interests of ordinary shareholders.

Kakao said the listing was structured primarily around liquidating shares held by a specific financial investor, making it difficult to view the arrangement as returning value to the company's general shareholders.

Kakao also said the dual listing could split investment demand between itself and Kakao Mobility, widen the net asset value discount on Kakao shares, complicate corporate valuation, and create potential conflicts of interest between shareholders of the two companies.

The company further said that because the offering centers on selling TPG's stake, no proceeds would flow directly to Kakao itself.

The board's decision introduces a significant new variable into Kakao Mobility's US ADR listing push, which had been gaining momentum since July.

Kakao stopped short of saying it would block a US listing outright. "We are not denying the need for Kakao Mobility's financial investors to recoup their investments," the company said, adding that it could reconsider the matter "if the listing structure or the economic benefits accruing to Kakao's general shareholders change, or if requested by regulatory authorities."

Kakao said it plans to issue a follow-up disclosure on the matter within six months.


chami@heraldcorp.com