(Bloomberg) -- A TPG-led group will invest 500 billion won ($437 million) in a ride-hailing startup to be spun out of South Korean social media giant Kakao Corp., throwing its weight behind a competitor to Uber Technologies Inc.
The consortium will end up owning about 30 percent of the new company, which will house Kakao Taxi as well as other auto-related businesses, a Kakao spokesman said. The South Korean company, which runs the nation’s most popular messaging service, will issue new shares in the startup to the incoming group as part of the deal.
The investment gives Kakao, which in past years has managed to beat back its larger U.S. rival in the domestic ride-hailing market, a cash infusion to further expand its online portfolio. The spinoff, to be called Kakao Mobility, aims to roll out new services in the second half, including corporate taxis, parking and automatic payments. Its core will remain the two-year-old Kakao Taxi app, which handles about 1.5 million calls daily from roughly 14.9 million users.
“Kakao Mobility has an innovative business model that is set to benefit from a rapidly emerging Korean mobility industry,” Tim Dattels, Managing Partner of TPG Capital Asia, said in a statement, which didn’t name the other investors.