Kakao VX set to attract W100 bil. in investments in 3rd round of capital increase

Kakao VX set to attract W100 bil. in investments in 3rd round of capital increase

Captured image from Kakao VX’s official website / Courtesy of Kakao VX

By Anna J. Park

Kakao VX, a subsidiary of Kakao Games, is in the process of attracting around 100 billion won ($90 million) in investments, as negotiations continue with a number of investors over calculating the corporate value of the affiliate.

According to investment banking industry sources Friday, around three financial institutions are said to have shown interest in investing in the affiliate. Kakao VX is likely to select the one that proposes the highest corporate valuation, as its key investor in the latest round of capital increase.

Kakao Games acquired Maum Golf ― the country’s second-largest screen golf business ― in 2017, and changed its name to Kakao VX, seeking to infuse the latest technologies, such as AI, VR and AR, into the business model.

Since then, Kakao VX has focused on providing a wide range of golf-related services, ranging from an AI-based home-training service and a mobile reservation system for golf courses. It is also launching a new screen golf brand called, “Friends Academy,” as well as a golf merchandise brand called, “Kakao Friends Golf.”

This round is the third round of investments to raise capital, following a capital increase of around 8 billion won from a pool of investors, including KB Securities, Mirae Asset Securities, Korea Investment Partners and BTC Investment in 2018. The firm received another 20 billion won in investments from Q Capital Partners in 2019, which is tantamount to about 17 percent of Kakao VX’s equity.

With money raised during this round of investment, Kakao VX is expected to focus on expanding its business further. In addition to its cash cow screen golf business, which accounts for a quarter of the country’s market share, the firm launched a consigned operation of golf courses nationwide, as well as acquired more golf courses.

The company succeeded in recording its first annual operating profit last year, as the firm recorded an annual revenue of about 57.2 billion won during that period. Annual revenue in 2020 increased 28 percent year-on-year and 84 percent from two years ago.

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