Yahoo Japan parent-backed fund to become top shareholder of Kakao Games

Kakao Games said Wednesday that a fund backed by Japan’s LY Corp. will become its largest shareholder, in a deal that marks a major ownership shift aimed at accelerating global expansion.

The company said LAAA Investment — a private equity fund established by LY Corp., the Japanese tech firm formed through the merger of Line and Yahoo Japan in 2023 — will acquire part of the stake held by Kakao, previously the largest shareholder with a 37.6 percent stake. The size of the stake sale was not disclosed.

In addition to purchasing existing shares, LAAA Investment participated in a 240 billion won ($161 million) third-party allotment capital increase and subscribed to 60 billion won worth of convertible bonds issued by Kakao Games.

Once the transaction is completed in May, LAAA Investment will become the largest shareholder of Kakao Games, while Kakao will be diluted to the second-largest shareholder, maintaining its strategic partnership with the game developer.

Kakao Games said it expects the agreement to strengthen its financial stability and long-term growth foundation, securing a total of 300 billion won through the transaction to boost global competitiveness and expand overseas operations.

Kakao will reinvest part of the proceeds from the share sale into Kakao Games, signaling continued support despite relinquishing control.

The company said the ownership restructuring is aimed at improving execution in global markets and creating new collaboration opportunities, adding that it expects to expand synergies in Japan and other key regions by leveraging its new controlling shareholder.

According to Kakao, the agreement also guarantees job security and the continuation of existing employment conditions at Kakao Games, ensuring organizational stability and continuity.

“This strategic investment and ownership restructuring mark an important turning point in enhancing Kakao Games’ global competitiveness and building a sustainable growth foundation,” a company official said. “We aim to pursue new growth opportunities in global markets through cooperation with Kakao and LY Corp.”