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| Kakao founder and Chairman Kim Beom-su, right, poses with the company's Ryan bear. / Courtesy of Kakao |
By Kim Hyun-bin
Kim Beom-su, founder and chairman of the country's largest messaging application Kakao, was found to have hired his children to work at the company's de facto holding company K Cube Holdings, which many business insiders believe is a means to ensure a smooth family ownership succession at the corporation.
According to the company, the chairman's son Kim Sang-bin (28) and daughter Kim Ye-bin (26) started working last year for K Cube Holdings, in which the chairman owns outright.
K Cube Holdings currently holds 11.21 percent of Kakao's shares, marking it as the corporation's second-largest shareholder, while the chairman remains the largest with 13.74 percent Kakao, which technically places Kim's total Kakao shares at 24.95 percent, giving him influence over the management of close to 100 affiliates of the corporation.
Kakao said K Cube Holdings is Kim's private company and is only relevant due to its shareholder status, however, industry watchers deem K Cube Holdings to be a de facto holding company for Kakao.
K Cube Holdings has been known as an investment and business consulting company, but it hasn't conducted any official business activities.
The chairman has been strengthening K Cube Holdings through mergers with other private companies he owns. Placing his children in the firm raised speculation that this may be the groundwork to conduct a future ownership succession seamlessly.
Recently, the chairman gave his wife and two children 60,000 Kakao shares each, worth 26.2 billion won. Industry insiders believe the process was made bearing in mind future succession issues.
'K Cube Holdings is Chairman Kim's private investment company and the children have been working here for one year to learn the business and it has nothing to do with a succession," a K Cube holdings official said.
As of May 2020, the company consists of five employees representing Chairman Kim's family and close aides.
Last year, the CEO of the company was Chairman Kim's younger brother Kim Hwa-young. Total salaries provided to employees accounted for 1.54 billion won in 2018 and 1.41 billion won in 2019. The founder's two children's pay was not made known. Recently, the company appointed a new CEO, Kim Tak-heung, who the company says is not a relative of the chairman.
Chairman's next move
Chairman Kim is aiming to expand its company's influence overseas by creating a large-scale entertainment affiliate, Kakao Entertainment. The 7 trillion won company has been made possible through the merger of Kaka Page and Kakao M. Kim Beom-su is the mastermind behind the plan to better position the company on the global stage. Before he focused on raising recognition of its affiliates separately but through the merger Kim aims for a game changer in the global market.
Kako announced the planned merger Monday, and the two companies are scheduled to complete the procedure to become Kakao Entertainment, March 1.
Chairman Kim has set Kakao Entertainment's priority as "challenging the global market and innovation," adding that "currently, the synergy between the two companies' stands at its peak."
This is the 12th year since Kakao was established and its greatest weakness has been the global market. Kakao has 50 million users through its messenger platform Kakao Talk, but many have labeled the service as only befitting the local market. To overcome its weakness Kakao has been focusing on establishing a large entertainment company that creates webtoons, songs and videos.
The two companies' sales in 2019 accounted for 700 billion won and are expected to exceed 1 trillion won for last year. The financial world expects Kakao Entertainment's corporate value to be around 7 trillion won.
?
The key is to establish a content ecosystem that will enhance the company's value. Kakao Page has over 8,500 original story intellectual property rights (IP) and services in 10 countries including those in North America and Southeast Asia, as well as China and Japan, and operates a celebrity management business through Kakao TV.
Previously, the local entertainment industry was mainly the "Big 3" YG, JYP and SM Entertainment whose value is mostly derived from K-Pop content, however now large conglomerates including Naver, Kakao, NC Soft, Big Hit Entertainment have been entering the market with K-content such as webtoons and dramas with all having the global market in mind.
