Korea Investment & Securities board agreed to pay 142 billion won ($128.9 million) to its wholly owned subsidiary Korea Investment Value Asset Management, as Kakao Bank moves on to raise nearly a combined 1 trillion won by year-end before an initial public offering poised to take place next year, filings showed Wednesday.

KIVAM is currently the second-largest shareholder of Kakao Bank after internet giant Kakao.

KIVAM‘s proceeds will be used to buy 6 million newly issued common shares of the nation’s largest mobile-only lender, for 23,500 won each. Considered one of the trailblazers in South Korea‘s value investing landscape, KIVAM is set to invest 143 billion won to take part in the pre-IPO deal at the 8.58 trillion won valuation.

As a result, KIVAM will control 27.1 percent of Kakao Bank stake once the 1 trillion-won equity capital increase during the fourth quarter is complete later this month, down from 28.6 percent before the fundraising.

KIVAM became the major shareholder of the lender in November 2019, as its holding company Korea Investment Holdings handed down part of its 34 percent ownership to its indirect subsidiary to abide by the Financial Holding Companies Act. Korea Investment Holdings first held Kakao Bank shares in 2015.

Kakao Bank’s pre-IPO deal is inviting existing shareholders including Kakao and KIVAM as well as new investors such as US-based private equity firm TPG Capital and Hong Kong-based private equity firm Anchor Equity Partners.

TPG Capital paid 250 billion won to Kakao Bank in exchange for its new shares in November, while Anchor Equity Partners is set to complete another 250 billion won transaction by Monday. Each investor will be given 10.6 million new shares of Kakao Bank.

Once all shareholders complete the funding by end-December, Kakao Bank‘s equity capital will rise to 2.83 trillion won.

Meanwhile, Kakao Bank plans to go public next year as its process to select IPO underwriters is underway.

By Son Ji-hyoung (consnow@heraldcorp.com)