이 기사는 2021년 04월 08일 08시07분 thebell에 표출된 기사입니다

Kakao’s content subsidiary Kakao Entertainment will acquire global web novel platform Radish, with attention being paid to whether Kakao will offer an enterprise value that satisfies financial investors’ expectations.

Founded in 2016 by Lee Seung-yoon, Radish has SoftBank Ventures, Lowercase Capital and Naver Webtoon as early investors.

The platform raised 76 billion won ($68 million) in a Series A funding round last year, led by SoftBank Ventures and Kakao Entertainment, then known as Kakao Page. Kakao Entertainment invested some 32.2 billion won to hold a 13.16% stake in the company.

Mirae Asset Venture Investment, Mirae Asset Capital, Partners Investment, and Daekyo Investment were among domestic institutional investors in the funding round. After the investment has been made, Radish appointed Lee Jin-soo, chief executive of Kakao Entertainment, Lee Joon-pyo, chief executive of Softbank Ventures, and Kim Sang-heon, former chief executive of Naver, as its outside directors.

Investors including Kakao Entertainment are said to have made their investment to capitalize on Radish’s potential in intellectual property, given its status as the fifth-biggest web novel platform in the United States.

Kakao Entertainment is reportedly seeking to take full control of the platform for around 400 billion won. It is expected to acquire new shares issued by Radish alongside shares owned by existing shareholders. Financial investors which made their investment last year are allowed to participate in the sale by exercising their tag-along rights.

It is said that existing financial investors have not been informed of financial terms offered by Kakao Entertainment.

Early investors, who bought shares in Radish at a very low price, are expected to gladly offload their shares. But financial investors that made investments last year may want to keep their shares unless the valuation proposed by Kakao Entertainment is acceptable.

Radish CEO Lee may remain in post after the change in the largest shareholder to help the company's post-merger integration process. In this case, Lee will likely keep some of his stake in the company, while selling a controlling stake to Kakao Entertainment.

Kakao Entertainment valued 100% of Radish at around 240 billion won in July 2020. Radish recorded revenue of 23 billion won last year, nearly a ten-fold increase year-on-year. Market insiders said Kakao Entertainment’s offer of 400 billion won is reasonable as the company's revenue is expected to continue to grow at a rapid pace.

Previously, Naver bought Toronto-based social storytelling platform Wattpad for 653.3 billion won, equivalent to 10 times Wattpad’s estimated sales for 2021. (Reporting by Si-eun Park)