Kakao’s endorsement propels the Korean gaming entrepreneur to billionaire status

Kim Jae-young, the founder of South Korean online game developer Lionheart Studio, is now a billionaire after a $925 million investment from local internet giant Kakao, becoming the third games entrepreneur in the game-obsessed country. video games since last year to achieve billionaire status.

Kakao Games Europe, the European subsidiary of Kakao’s gaming arm, Kakao Games, bought a 30.37% stake in Lionheart for 1.2 trillion won ($925 million) in late June, valuing the company at around 3 billions of dollars. Most of the stake was purchased from Kim, who now owns 34.67% of Lionheart. Kim, who is CEO and President of Lionheart, also owns a 2.87% stake in Kakao Games, whose revenue has reached record levels thanks to Lionheart’s hit online game. Odin: The Rise of Valhalla. Combined, Forbes estimates his net worth at $1.7 billion.

Developed by Lionheart and published by Kakao Games, Odin was released in South Korea in June last year and topped the country’s app store chart. Release of Kakao games Odin in Hong Kong, Macau, and Taiwan in March, and the company is gearing up to release the game in Japan in the second half of this year. Odin has been downloaded more than a million times on Google’s Play Store, including 10,000 in the past month, according to app research firm Sensor Tower.

When Odin was launched, the game lifted Kakao Games’ mobile game revenue to a record high of 410.5 billion won ($315 million) in the third quarter of last year, up 359% from the same period last year. Lionheart, which makes all its money from Odinreported revenue of 232.6 billion won ($180 million) in 2021 and a loss of 150.7 billion won, compared with a loss of 25.4 billion won the previous year.

Based in Seongnam, south of Seoul, Lionheart is preparing for an IPO, according to a spokesperson. Local journal Email Business Journal reported that Lionheart could be valued at 8 trillion won ($6 billion), citing analyst estimates. Lionheart’s IPO would be the largest by a South Korean video game company since that of billionaire Chang Byung-gyu Krafton, which raised $3.8 billion last August on the Korea Exchange.

Kim founded Lionheart in 2018 primarily with investments from Kakao Games and game developer Wemade, a pioneer in blockchain-based games in South Korea. Kakao Games has gradually increased its stake in Lionheart over the years and now owns 24.57% of the company. Along with its European arm, Kakao Games, part of billionaire Kim Beom-su’s internet conglomerate, Kakao owns the majority of Lionheart. The other major shareholder is Wemade, which has a 4.23% stake after selling nearly half of its stake in Lionheart to Kakao Games.

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“With the acquisition of a majority stake in Lionheart Studio, the developer of the hit title Odin, Kakao Games needs to strengthen its development capabilities and deliver significant profit growth,” Jaemin Ahn, an analyst at NH Investment & Securities, said in a research note. “The acquisition should be an opportunity for Kakao Games to seriously target the global market.”

Prior to Lionheart, Kim previously co-founded another online game company, Action Square, in 2012, which went public on the Korea Exchange through a special-purpose acquisition company in 2015. Previously, Kim, who holds a master’s in mechanical engineering from Hanyang University in Seoul, worked at Japanese video game maker Koei (now part of billionaire couple Yoichi and Keiko Erikawa’s Koei Tecmo) and Neowiz, one of Korea’s first internet companies of the South, co-founded by Krafton’s Chang.

Last year, Park Kwan-ho, founder of Chang and Wemade, also became a billionaire in his own right. Other South Korean gaming entrepreneurs in the three comma club are Kim Taek-jin of NCSoft, Bang Jun-hyuk of Netmarble, Lee Joon-ho of NHN Entertainment, Kim Dae-il of Pearl Abyss and Kwon Hyuk-bin of Smilegate.

Kim Jung-ju, founder of Nexon, pioneer of the free-to-play model where users play games for free but pay for virtual items and accessories, was the richest South Korean video game entrepreneur until his death suddenly in February at the age of 54. His wife, Yoo Jung-hyun, who helped start Nexon in 1994, debuted on Korea’s 50 richest list this year with a net worth of $3 billion.

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