Kakao Entertainment raises $529 mil in commercial paper issues Kakao’s entertainment arm likely to increasingly tap bond market to fund acquisitions

Translated by Ryu Ho-joung 공개 2021-07-27 10:32:44

이 기사는 2021년 07월 27일 07:57 더벨 유료페이지에 표출된 기사입니다.

Kakao Entertainment, the entertainment arm of Kakao Corp, has collectively raised 610 billion won ($529 million) in two commercial paper issues in July, to meet its cash needs as it increases investments to bulk up the company ahead of a planned initial public offering.

The company issued commercial papers of 310 billion won on July 21, according to data from Korea Securities Depository. The issue consisted of 90-day note and 362-day note worth 160 billion won and 150 billion won, respectively, with each underwritten by Korea Investment & Securities and KB Securities.

The fundraising came two weeks after Kakao Entertainment raised 300 billion won earlier this month through a commercial paper issue consisting of 91-day and 363-day notes, underwritten by KB Securities. This was the first commercial paper issuance by the company.

Kakao Entertainment has so far raised necessary funds from its parent company and outside equity investor Anchor Equity Partners while keeping its long-term debt at a zero level. But its fundraising needs have increased as the company steps up investments to expand its business.

The company was founded in March after the merger of Kaka Page and Kakao M, with its business areas spanning online cartoons, web novels, digital music distribution, and film and drama production.

Shortly after its foundation, Kakao Entertainment announced its acquisitions of US storytelling apps Radish and Tapas in deals totaling 786 billion won in May. It also invested 21 billion won in Baram Pictures, its wholly owned drama production subsidiary, earlier this month.

With its focus on original content and expansion to overseas markets, Kakao Entertainment is expected to be in need of more cash to fund further strategic acquisitions. At the end of February, its cash and cash equivalents were only around 188.4 billion won.

Kakao Entertainment’s IPO plan is expected to occur as early as next year as the company now focuses on expanding its business. In the meantime, Kakao Entertainment is likely to raise funds in the debt capital market by issuing commercial papers or corporate bonds.

There are views that Kakao Entertainment could be valued at as much as 10 trillion won in the IPO if it shows investors its growth potential as a global content company. NH Investment & Securities, KB Securities and Citigroup Global Markets Securities have been named as lead managers and Morgan Stanley as co-manager for the IPO. (Reporting by Seok-cheol Choi)
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