In South Korea's ride-hailing market, Kakao Mobility holds the leading position, and it may soon be selling shares to American investors. On July 2, the company quietly took the initial step toward a US listing by sending the Securities and Exchange Commission its draft registration paperwork for what are known as American Depositary Receipts, or ADRs.
ADRs are a way for foreign companies to sell shares on US exchanges without going through a traditional listing. Investors get a certificate that trades like a stock but represents ownership in a company based halfway around the world.
Parent company Kakao Corp. confirmed the filing in a regulatory disclosure on Thursday. The move would let TPG, Kakao Mobility's longtime private equity backer, sell down its stake through the US listing.
Kakao Mobility operates the dominant ride-hailing app in South Korea, where it has long been the go-to service for millions of users. The company previously prepared for a domestic IPO in 2022 but shelved those plans. Now it appears to be testing the waters across the Pacific.
The timing is no accident. Last month, SK Hynix, the memory chip maker, sold shares in the US in what was the largest-ever US share sale by a foreign company. Those ADRs at one point traded at a premium of more than 30% above their Seoul-listed equivalent, a sign that American investors will pay up for a piece of Korean blue-chip growth.
As Korean ride-hailing stocks gain US investors, grab the free Always Be Buying E-Book to build wealth steadily.
Kakao Mobility is clearly hoping some of that enthusiasm rubs off. With US investors eager for Korean tech names, the company seems to be seizing the moment.
TPG put around 500 billion won, or $358 million, into Kakao Mobility back in 2017. That is a long time to hold a private investment, and the ADR plan is one of several ways the firm could finally cash out. The ADRs would represent only TPG's stake, so the deal is less about raising money for the company and more about giving TPG a way out.
Kakao Corp. still holds a controlling 57.2% stake in the ride-hailing firm, so TPG's exit would not change who is in charge. But it would give everyday investors a way to bet on the future of mobility in South Korea, where Kakao's app dominates the ride-hailing market.
A US listing would be a different path, giving the company access to American capital markets and handing TPG a way out of an investment it has held for years. For Kakao Corp., the deal would also test whether the popularity of Korean assets among American investors extends beyond chipmakers.
Nothing is set in stone. Kakao's board has not decided whether to go ahead, leaving the deal's scale, schedule, and other conditions unsettled. Kakao Corp. has stated that it will share more details in about a month, or as soon as its board makes a call.
For investors, the bigger picture is this: Korean companies are discovering that American investors will pay up for growth. SK Hynix proved the demand, and Kakao Mobility wants to prove it can be repeated.
If the deal goes through, you will be able to own a piece of South Korea's ride-hailing leader from a US brokerage account. If it falls through, you have not lost anything. The company has been down this road before, and it knows the way.
When global markets open up, download the Always Be Buying E-Book for a simple investing routine.