TPG re-enters Korea with $437m mobility deal

The firm’s investment in Kakao Mobility is its first deal in Korea after re-opening its Seoul office last year.

A consortium led by global private equity firm TPG Capital has agreed to acquire 30 percent of Kakao Mobility, the mobility-focused business of Korea’s largest online and mobile platform operator Kakao, for KRW 500 billion ($437 million; €382 million).

This is TPG’s first deal in the country since it shut down its Korea office in 2008. The firm came back to the country last year when it re-opened its Seoul office and appointed former Morgan Stanley managing director Sanghoon Lee to lead its investments activities in Korea in August.

Following the completion of the deal, Kakao Mobility will be spun out from parent company Kakao. Joohwan Jung, former vice president of Kakao Mobility, will also become chief executive of the independent entity, according to a statement.

Kakao Mobility runs three units – mobile taxi service Kakao Taxi, app-based designated driver service Kakao Driver and navigation app Kakao Navi.

With TPG’s investment, the company plans to accelerate the growth of Kakao Taxi, which receives 1.5 million calls daily, by introducing a corporate call taxi service in the third quarter, launching an automatic payment system and offering test drives through partnerships with local and global car manufacturing companies. Meanwhile for Kakao Driver and Kakao Navi the company aims to boost marketing initiatives to grow its user base and enhance its data and tech platform, respectively.

Commenting on the transaction, Tim Dattels, managing partner of TPG Capital Asia, said in a statement: “Kakao Mobility has an innovative business model that is set to benefit from a rapidly emerging Korean mobility industry. For many years, across the firm’s platforms, we have been focused on identifying and partnering with disruptive companies similar to Kakao Mobility that are challenging, transforming, and evolving existing industries.”

TPG invested from TPG Asia VI, its flagship Asian fund which closed on $3.3 billion in 2014.

The firm is also in market with its seventh Asia-focused buyout fund TPG Asia VII, which has a target of $4.5 billion, and is on track for a final close in the third quarter of the year, a source with knowledge of the matter told Private Equity International.

In Asia TPG manages over $6 billion of assets and focuses on investments in Greater China, India, South-East Asia, Australia and Korea.