[단독] 500 billion won attack investment notice Kakao Games… Developer M&A review

Kakao Games is pushing for the first large-scale fund raising since its listing and is starting to acquire and merge game companies (M&A). The goal is to increase competitiveness and diversify sales sources by strengthening domestic and overseas portfolios.

According to the investment banking (IB) industry on the 25th, it is known that Kakao Games will select KB Securities as the lead and issue a 500 billion won worth of privately held convertible bonds (CB) at the end of this month. Both the coupon rate and the guaranteed maturity rate were set at 0%. Even if the CB is held until maturity, it does not pay interest at all. In addition, conditions such as ▲ granting of call options (sell claims) to 50% of the total volume ▲ exercise of put options for three years from the date of issue of bonds ▲ no refixing (stock price rebalancing), etc. were imposed.

Previously, Kakao Games, which was listed in September last year, predicted aggressive investments such as M&A and securing new intellectual property rights (IP) 85% of the public offering fund of 300 billion won. Using actual funds, it acquired Neptune at the end of last year (193.5 billion won) and spent about 50 billion won on Kakao VX investment.

The market believes that it is an extension of investment in order to secure new momentum in order to raise capital again after listing. The company achieved its record-high performance last year, but its corporate value remains unchanged. This reflects Kakao Games’ willingness to overcome the current stock price stagnation by acquiring its own development copyright, which has been suffering from controversy over valuation (share price level compared to earnings) since listing.

In the IB industry, game developers ▲ Lionheart Studios ▲ Second Dive ▲ Ocean Drive are mentioned as promising targets for review. The expected acquisition amount is between 150 and 200 billion won.

These game companies have already established a strategic relationship through equity investment by Kakao Games. Lionheart is a new company that has developed a new mobile game,’Odin,’ and Kakao Games has signed a publishing contract and holds the copyrights of Odin in Korea and Taiwan. At the same time, it has invested around 18 billion won since 2018 and is currently the second largest shareholder. In March of last year, just before listing, it invested 10 billion won each in Second Dive and Ocean Drive. Second Dive is a game company founded in 2019 by CEO Ban Seung-cheol, who developed the mobile game’Dark Avenger’ series. Ocean Drive Studio was founded last year by CEO Kim Hee-jae, who made the PC game’FIPA Online 1 and 2′.

An official from the IB industry said, “In the end, we will focus on proven companies that can make IP and try global services while already making strategic investments.” -The plan is to be reborn as a comprehensive game company by completing the development chain,” he analyzed.

Kakao Games said, “There is no content that can confirm the issuance of CB and financing.”

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