K-pop agency SM Entertainment is reportedly investing an additional KRW 6 billion (USD $4.1 million) in fresh funding into its subsidiary SM Friends Co. Ltd.
The capital injection will be executed through a shareholder allocation paid-in capital increase, with SM Friends issuing 1.2 million common shares priced at KRW 5,000 each, according to a report on Market Screener.
The transaction, which was completed on Friday (March 14), will reportedly maintain SM Entertainment‘s 100% ownership stake in the subsidiary.
The latest funding round follows a larger KRW 15 billion investment made previously into SM Friends.
SM Friends underwent a strategic transformation in 2023 when SM Entertainment announced plans to rebrand it as Kreation Music Rights, a dedicated music publishing division. The restructuring was designed to consolidate the entertainment giant’s music publishing operations under a single entity.
“With the introduction of multi-production center system, securing massive high-quality songs became more important. Therefore, we decided to establish a music publishing subsidiary called Kreation Music Rights,” SM Entertainment CEO Jang Cheol Hyuk said at the time.
The transformation of SM Friends aligns with SM Entertainment’s SM 3.0 strategy, launched in March 2023, which aims to unify its music, content, and distribution efforts.
The multi-production center approach for Kreation Music allows individual production centers autonomy over their creative output and business operations. Each center operates under dual leadership, with separate directors handling production and management responsibilities, SM said in 2023.
The capital injection into SM Friends marks the latest in a series of strategic investments by SM Entertainment. Recently, the company acquired an 11.4% stake in fan communication platform DearU from rival JYP Entertainment and other investors for approximately KRW 140 billion ($96.6 million) with SM directly investing KRW 135.57 billion of that total.
SM Entertainment also continues to expand its presence beyond managing K-pop artists. Earlier this month, the company announced plans to launch a K-pop training academy in Singapore, charging aspiring performers USD $10,000 for the chance to train under its system.
Founded in 1995, SM Entertainment has launched some of the K-pop industry’s biggest acts, including Girls’ Generation, Red Velvet, aespa, NCT, and Riize. The company’s newest group, Hearts2Hearts, debuted recently with their single The Chase.
In the fourth quarter of 2024, SM Entertainment reported a 9% YoY increase in revenue to KRW 273.8 billion, driving operating profit up by 275.6% YoY to KRW 33.9 billion for the three-month period. However, the company booked a net loss of KRW 24.1 billion in Q4 2024, less than half the KRW 52.8 billion loss in the same quarter a year earlier.
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