[Why&Next] Data-Hungry Goldman Sachs: The Real Reason It Is Acquiring Tmap

User Data to Drive AI Synergies
'Carve-Out Listing' Controversy... IPO Plans Ahead

"Navigation and map apps that were once unprofitable have become more important with the development of artificial intelligence (AI) because, ultimately, they hold data."

The map app industry is abuzz as global investment bank Goldman Sachs moves to acquire control of TMAP Mobility, the operator of TMAP, South Korea's No. 1 navigation service. With Google aggressively targeting the domestic market using AI, the market landscape for navigation and other map services could be shaken up if TMAP, too, comes under the backing of foreign capital.

TMAP recorded revenue of KRW 283.5 billion and an operating loss of KRW 14.1 billion last year. However, it posted its first annual net profit, of KRW 25 billion, and, while continuing to sell non-core assets, achieved its first monthly operating profit in June this year. "Map apps and navigation services have long been peripheral businesses: they are necessary, but do not generate much profit for operators," an industry official said. "Recently, with the development of AI, they have evolved beyond simple directions into platforms offering place recommendations and content curation, prompting a reassessment of the business."

According to investment banking industry sources, SK Square, TMAP Mobility's largest shareholder, is negotiating with Goldman Sachs to sell its controlling stake, with the aim of completing the deal by the end of this year. SK Square is expected to retain some of its shares and remain the second-largest shareholder after the sale. Goldman Sachs is reportedly considering acquiring stakes not only from SK Square, which holds 63.23%, but also from major financial investors, including Senta Mobility Investment Purpose Company, Terameter Holdings and KB Kookmin Bank.

Data is ultimately at the heart of Goldman Sachs' bid to acquire TMAP. Extensive map and user activity data can create added value when connected with AI businesses and could become an important asset for pursuing future new ventures. Goldman Sachs has shown a series of moves to expand its interest in the mobility market, including forming a consortium with private equity firm VIG Partners last year to pursue the acquisition of a stake in Kakao Mobility.

The market is also watching to see whether TMAP will begin the initial public offering (IPO) process following this change in ownership. SK Square considered an IPO for TMAP Mobility in 2021 but faced difficulties amid controversy over the overlapping listings of subsidiaries, among other issues. However, if Goldman Sachs becomes its owner, TMAP could avoid the controversy over a "split listing" and raise capital through an IPO. SK Square plans to remain the second-largest shareholder and benefit from the IPO, while creating synergies in areas such as AI through a partnership with an investor that has a global network.

Competitors are also keeping a close eye on TMAP's next moves. "The map business, which had long been peripheral, has gained prominence with the development of AI," a NAVER representative said. "We hold key data that can create additional value in the AI era, and are actively using it to develop additional content and services." A Kakao Mobility representative said, "Location data is extremely important for autonomous driving and physical AI services, and its value will only continue to grow."

Regarding the private equity acquisition, TMAP Mobility said that specific discussions have not yet been disclosed because the deal has not been finalized, adding that it is approaching the matter as an investment for the future.

This content was produced with the assistance of AI translation services.