Korea’s Kakao, the country’s top mobile messenger company with some 50 million monthly users, has continued to diversify its business with a move to spin-out the unit managing its mobility services, which include a ride-hailing app that is beating Uber in Korea.
The firm announced that ‘Kakao Mobility’ has now become an independent entity in a move that sees U.S. investment firm TPG put 500 billion KRW, or approximately $437 million, into the business. TPG’s portfolio includes Uber — Kakao Mobility’s most visible rival in Korea — as well as Airbnb and Spotify.
This spin-out is aimed at fostering “swift decision making and aggressive expansion,” said Kakao, which merged with internet giant Daum in a multi-billion dollar deal in 2014.
Kakao’s 36-year-old CEO Jimmy Rim has been under pressure to maintain Kakao’s growth, and he’s opted to empower the firm’s business units. Today’s news comes months after Kakao granted similar independence to its Kakao Pay division, which manages its Kakao Pay mobile payment service and other financial assets. Kakao Pay also took on strategic funding, raising $200 million from Alibaba’s Ant Financial fintech unit.
Kakao Mobility is best-known for its Kakao Taxi service, which launched in Seoul two years ago. It was created in a bid to capitalize on Kakao’s domination in Korea — where it is installed on over 95 percent of smartphones — by going beyond messaging to offer services. Kakao shared that the service currently sees 1.5 million ride requests daily, while the service has expanded to Japan.
Uber has never provided figures for its Korean business, but the country hasn’t been a happy hunting ground for the U.S. firm.
Authorities issued a warrant for the arrest of then-CEO Travis Kalanick in 2014, while UberX was withdrawn for operating without a license in 2015 and it has not relaunched in Korea. Uber did manage to reintroduce its Black service in 2015, which was finally available to all users having previously been restricted to foreigners, government workers and citizens aged over 65.
Away from ride-hailing, other services within the Kakao Mobility business include Kakao Driver, an app that summons a designated driver which claims 2.7 million monthly users, and mapping service Kakao Navi, which has clocked up 10 million registered users since its launch in February 2016.
Kakao Mobility plans to use its fresh capital to introduce a range of new services. That include a corporate service for Kakao Taxi, integrations with Kakao Pay, a test drive service, and additional overseas expansions. It said, too, that it aims to introduce new updates and options for its Kakao Driver and Kakao Navi services.
“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, who has been appointed CEO of Kakao Mobility, said in a statement.
“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,” Jung added.