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[스트레이트] Behind ‘innovation’, ‘splitting and eating’ Kakao

◀ Hyo-yeop Kim ▶

Have you prepared one more piece of news?

‘Straight’ tries to address the chronic problem of our stock market once again.

Reporter Son Byung-san is here.

◀ Son Byeong-san ▶

Hello.

◀ Heo Il-hoo ▶

The domestic stock market is in a bad mood these days, isn’t it? Now, the term ‘Donghak Ant Movement’ has been popular for a while, but I don’t hear it these days.

◀ Son Byeong-san ▶

Yes, the background is the disappointment that individual investors, ants, felt in the Korean stock market.

First, let’s look at the situation of the ‘Kakao’ group, which has become the center of controversy following the ‘split listing’ and then the management’s large-scale stock sale.

Chairman Kim Beom-su, who started with KakaoTalk and now has over 100 affiliates, is the head of the ‘Kakao Group’.

Last year, he was called to the National Assembly audit three times.

He was faced with criticism that ‘even cacao infringes on alley commercial rights’.

Kakao affiliates do not make reservations for games, financial services, taxis, surrogate driving, delivery, and hair salons.

There is not.

In the end, Kakao decided to close some businesses and set up a 300 billion won win-win fund.

[김범수/카카오 의장 (국회 정무위 국정감사 2021년 10월 5일)]

“We will never enter a business that infringes on the alley commercial area. Rather than infringing on it, we will actively find a way to help the alley commercial area.”

This time, however, the controversy over ‘eat-up’ arose.

At the center of it was Ryu Young-jun, CEO of Kakao Pay, a simple payment service.

[류영준/카카오페이 대표]

“I am Young-Jun Ryu, who developed ‘Voice Talk’ (of KakaoTalk). Now I am the CEO of Kakao Pay, which developed Korea’s first simple payment.”

Kakao Pay, which was spun off from Kakao as a subsidiary in 2017, has grown rapidly, with sales jumping 26 times and transaction volume 17 times in three years.

And in November last year, it was listed on the stock market under the guise of so-called ‘people’s stock’.

[류영준/카카오페이 대표]

“We thought that it would be good for many people to continue to work with Kakao Pay in the future, and we thought it would be right to give all users of our service the opportunity to receive the same IPO share if they wish, regardless of whether they have many or few assets.”

The stock price settled at 200,000 won, more than double the public offering price of 90,000 won.

However, on December 10 of last year, one month after listing.

The 230,000 Kakao Pay shares held by CEO Young-Jun Ryu as stock options will be disposed of at once.

The stock option exercise price of CEO Ryu is 5,000 won per share.

I bought the stock for 5,000 won and sold it for 204,000 won.

The profit per share was 199,000 won, and the market profit reached 45.7 billion won.

Seven other executives of Kakao Pay, including Vice President Na Ho-yeol, also sold stocks, along with CEO Ryu.

If you add this up, the profit amounts to 87.8 billion won.

Of course, the stock option disposal did not violate any system or legal process.

However, Kakao Pay’s stock price plummeted by nearly 30% due to the simultaneous selling by management, which is rare in the market.

The fact that the management, who is more knowledgeable about insider information than ordinary investors, disposed of a large number of stocks within one month of listing was enough to give rise to the interpretation that the value of Kakao Pay was overestimated.

[심혜섭/변호사]

“If (the management) said, ‘If the stock price rises to a certain extent, we will sell it’, would the shareholders really make a subscription at such a high price? And would they buy it at a higher price?”

As criticism from investors and internal Kakao members poured in, Kakao Pay management held an in-house meeting, saying, “It is regrettable that a lot of noise has occurred internally and externally.”

Vice President Shin Won-geun, who will become CEO of Kakao Pay following Ryu Young-jun, promised not to sell the remaining 50,000 shares during his two-year term.//

However, Ryu Young-joon, who was transferred to Kakao, the head office of the group, announced that he would sell all remaining stocks in the first half of the year.

480,000 shares, double the amount sold last month.

As he moved to the position of CEO of the parent company, Kakao, it was justified that holding a large amount of stock in the subsidiary Kakao Pay would cause ‘conflicts of interest’.//

[서승욱/카카오 노동조합 지회장]

“Not all of the eight executives who made the sale had a conflict of interest. Also, even if there was a conflict of interest, there was actually a discussion about whether there was any other way other than the real individual selling and earning a profit. There wasn’t.”

The sense of loss to the management who thought ‘we grow together’ was great.

More than 1,900 Kakao employees joined the call for Ryu’s resignation.

[서승욱/카카오 노동조합 지회장]

“The listing of KakaoPay is the result of the blood and sweat of KakaoPay members and a large number of investors. In a way, the results are focused only on the management.”

In the end, CEO Young-jun Ryu decided to ‘voluntarily resign’ last Monday, and Kakao immediately enacted a regulation that restricts the sale of shares by executives of all affiliates from one to two years after listing.

In fact, the controversy over the infringement of alleyways and the management’s ‘stock option eat-out’ is not a separate issue, but all stem from Kakao’s business expansion strategy.

Core subsidiaries such as Kakao Games and Kakao Bank, which were listed before Kakao Pay, and Kakao Mobility and Kakao Entertainment, which are considering listing.

This is because Kakao has grown in size through ‘physical division’, which starts a business in a huge platform called KakaoTalk and then separates it into a subsidiary and lists it on the stock market when it establishes a certain position after starting a business.

[김우진/서울대 경영대학 교수]

“If unlisted companies in the form of affiliates each separately IPO (stock market listing) or raise funds, Chairman Kim Beom-soo’s stake in Kakao is not diluted and can exercise influence over the rest of the business. Fundamentally, Kakao What they are doing now is actually going to be a structure that is very similar to the rest of the large-scale corporate groups in Korea.”

In the process, executives hit the so-called ‘jackpot’.

At Kakao Bank, Chief Technology Officer Jeong Gyu-don sold 117,000 shares within a month of listing, collecting more than 3 billion won in difference.

[최남곤/유안타증권 연구원]

“I have an obligation to (manage) while growing the company as promised, but as soon as I make an IPO (stock market listing), I forsake that contract and obligation and go to the CEO of Kakao. In the end, it seems like the only intention is to use it as an ‘exit (profit realization)’ window.”

Kakao’s move is in stark contrast to its biggest rival, Naver.

Naver has several subsidiaries that have achieved success at home and abroad, such as Naver Financial, Naver Webtoon, and Snow, but only Naver is listed on the domestic stock market.

.

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