Woori withholds investment in Kakao Mobility amid controversy

Woori Financial Group is withholding its decision to invest some 400 billion won ($295 million) in Kakao Mobility over the recent controversy surrounding its overstated revenue, according to local media reports on Wednesday.

Woori had plans to invest in Kakao Mobility, a subsidiary of IT giant Kakao, as part of the effort to strengthen its strategic partnership with the mobility operator.

But the decision has been put off amid the financial watchdog’s recent probe into Kakao Mobility’s financial statements to determine whether the firm overstated its revenue through inappropriate accounting methods.

Some critics speculate the calculation method was used to inflate its corporate value to raise the initial public offering price ahead of the planned listing. The mobility firm denied any wrongdoing and the impact of its accounting method on the company’s corporate value.

Woori did not officially confirm the decision, but the firm has been deliberating the Kakao Mobility investment following the recent challenges Kakao affiliates face, according to a report from Yonhap Infomax, citing an official from Woori.

Kakao and Kakao Entertainment are currently under fire for allegations of stock price manipulation linked to a takeover bid of the entertainment powerhouse SM Entertainment.

Kakao and Hybe, which manages BTS, were involved in a bidding war to take over SM Entertainment in March. The allegations are rooted in suspicions that executives at Kakao and Kakao Entertainment may have interfered with an open market purchase of Hybe.

BY JIN MIN-JI [jin.minji@joongang.co.kr]