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Kakao IPO: The WhatsApp of Korea Prepares for Offering

The timing for the deal couldn't have been better


According to a report in the Wall Street Journal, Kakao is preparing for an IPO. The company is the developer of the most popular messaging service in Korea. In other words, given the $19 billion price tag that Facebook (FB) paid for WhatsApp, the timing of a Kakao IPO looks spot-on.

Kakao-ipo-whatsappThe company’s service, called Kakao Talk, is free and available on Apple’s (AAPL) iOS, Google’s (GOOG) Android, BlackBerry (BBRY) and Microsoft’s (MSFT) Window Phone. The app allows for texts as well as phone calls. But users can also share photos and videos.

Launched in 2010, KakaoTalk has grown to 133 million users. And there are only 50 million people in Korea. That means Kakao has been getting traction in other parts of Asia like Malaysia, the Philippines and Indonesia.

As a sign of its success, the company has attracted big-time financial backers. For example, one is Tencent (TCEHY), which operates the popular WeChat messaging service.

Kakao’s current financials are not known. But according to the company, it reached profitability back in 2012. Keep in mind that it has added paid features like games and stickers to its core service.

The Kakao IPO may not be the only one for Asian-based operators, either. It also looks like Line is thinking of a deal. The company is the largest messaging service in Japan, with more than 350 million users. And of course, Tencent may even consider an offering for WeChat. Might as well strike while the market is hot, right?

And again, Facebook’s validated the space with the WhatsApp deal. So a Kakao IPO could be huge.

For now, the company definitely plans an offering on the Korean exchange, and might even bring the Kakao IPO to U.S. markets as well. In fact, it looks like the company is close to retaining Morgan Stanley (MS) and Samsung Securities as the lead underwriters, according to The Wall Street Journal. A deal could bring in more than $2 billion.

And if WhatsApp is any indication, expect the Kakao IPO to be a big one.

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO StrategiesAll About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

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