Online giant Kakao announces major investment in K-pop leader SM Entertainment

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Korean online media giant Kakao has bought an almost 10% stake in major K-pop agency SM Entertainment, whose clients include Aespa and SuperM.

The acquisition of a 9.05% stake for an estimated $172.8m makes Kakao – which has interests in social media, banking and technology development – the second largest shareholder of SM Entertainment.

The companies said they plan to take the lead in raising the global status of K-culture through multilateral business cooperation in the music and content environment. They will also jointly prepare future businesses by developing technological capabilities, such as AI possessed by Kakao, and utilising Seoul Arena.

The deal comes soon after SM unveiled its latest growth strategy, dubbed SM 3.0, which includes the setting up of five new production hubs and several music labels at home and overseas.

Bae Jae-hyeon, CEO of Kakao Community Investment, said: “Through this investment and cooperation, we expect that the two companies will be of great help to each other in responding together to the fierce competition in the global music and content market and targeting the global mainstream of K-content. We will contribute to the expansion of K-culture’s global influence through multifaceted cooperation in the future.”

Kakao’s investment in SM Entertainment comes a month after Kakao Corp subsidiary Kakao Entertainment secured approximately $966m investment from leading sovereign wealth funds.

SM Entertainment announced revenue of $582.0m and net income of $102.0m in 2021.

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