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Private equity firm Anchor Equity Partners has agreed to invest about 570 billion won ($505 million) in Kakao’s Japanese content business, betting on the growth of the country’s web cartoon market.

The South Korea-based internet giant said in a press release on Thursday that its Japanese unit, Kakao Japan, had raised about 600 billion won from Anchor Equity Partners and other foreign investors including sovereign wealth funds at a valuation of 8.8 trillion won.

According to a regulatory filing released on the same day, Anchor Equity agreed to acquire 67,930 common shares in Kakao Japan in a private placement at a purchasing price of 8,283,683 won per share. If the transaction is completed early next month, the private equity firm will own about 7% of the company.

The investment marks the third deal between Kakao and Anchor Equity. A consortium led by the South Korea-focused firm invested 125 billion won in mobile content provider Kakao Page, formerly known as Podotree, in 2016 at a valuation of 500 billion won. Kakao Page’s value more than doubled in about three years as it was valued at 1.25 trillion won in its rights issue in June 2019.

Anchor Equity also invested 210 billion won in Kakao M, which engages in music and entertainment services, in March 2020 in a deal that valued the company at 1.7 billion won.

The private equity firm has continued to expand its exposure to digital content businesses based on its belief in the long-term growth prospects in this space. The recent investment is particularly focused on the growth potential of the web cartoon market in Japan.

The Japanese comics market is considered the world’s largest, with a large pool of content and a wide consumer base. Cartoon consumption in the country is increasingly shifting from offline to online, especially among younger generation, with the Covid-19 pandemic accelerating the pace of this change as people spend more time with digital content during lockdowns.

This trend has prompted intensifying competition between content platform operators to grab a bigger share in the country’s burgeoning digital cartoon market.

Kakao Japan operates comics platform Piccoma. Since it was launched in April 2016, Piccoma has grown rapidly with its differentiated business model.

Piccoma had around 20 million downloads in 2020, and was ranked number one in non-game app sales for the first time in Japan in July and has so far stayed in the first place, according to data from the Korea Creative Content Agency. In 2018, Kakao Japan also launched Piccoma TV, the video streaming service based on the platform’s comics content.

“Piccoma’s digital manga sales have been growing faster than those of competitors,” Kakao said in the press release. “Especially, sales from webtoon content increased more than six-fold year-on-year in 2020.” (Reporting by Hee-yeon Han)