New Financing for SM Friends
Reports indicate that K-POP agency SM Entertainment is set to inject an additional KRW 6 billion ($4.1 million) into its subsidiary, SM Friends Co. Ltd.
This capital infusion will be executed through a paid distribution of shares, involving an increase in capital, with SM Friends issuing 1.2 million ordinary shares at a price of KRW 5000 each, according to a report on Market Screener.
The transaction was finalized on Friday (March 14), with SM Entertainment holding a 100% ownership stake in the subsidiary.
Recent Investment Highlights
This recent funding round follows a significant previous investment of KRW 15 billion, as detailed in an earlier report about investment in SM Friends.
In 2023, SM Friends underwent a strategic transformation, with SM Entertainment announcing plans to rename the branch as part of the Creation of Musical Rights allocated unit for music publishing. This restructuring is aimed at consolidating the entertainment giant’s music publishing efforts under a single entity.
“With the implementation of a multi-production center system, the provision of a significant volume of high-quality songs has become increasingly important. Therefore, we decided to establish a music publishing subsidiary, Music Rights,” stated Jang Cheol Hook, the General Director of SM Entertainment, at that time.
The transformation of SM Friends aligns with the SM 3.0 Strategy launched in March 2023, designed to harmonize their music, content, and distribution efforts.
This multi-production center approach allows each production center to operate autonomously concerning creative production and business operations, with individual directors overseeing production and management duties, as detailed by SM in 2023.
Future Ventures and K-POP Expansion
The capital injection into SM Friends marks another strategic investment initiative from SM Entertainment. Recently, the company acquired an 11.4% stake in the fan communication platform Expensive from rival JYP Entertainment and other investors for approximately KRW 140 billion ($96.6 million), with SM directly investing KRW 135.57 billion out of this total.
Additionally, SM Entertainment is expanding its influence beyond managing K-POP artists. Earlier this month, the company announced plans to launch a K-Pop Academy in Singapore, charging aspiring performers $10,000 for the opportunity to train under its system.
Founded in 1995, SM Entertainment has been responsible for some of the biggest names in the K-POP industry, including Girl Generation, Red Velvet, Aespa, NCT, and RIIZE. Their latest group, Hearts2hearts, recently debuted with their single Chase.
In the fourth quarter of 2024, SM Entertainment reported a 9% year increase in revenue to KRW 273.8 billion, resulting in an operating profit that surged 275.6% year to KRW 33.9 billion over the three-month period. However, the company did report a net loss of KRW 24.1 billion in Q4 2024, although this was less than half the losses of KRW 52.8 billion recorded in the same quarter the previous year.
SM Entertainment injects another $4M into SM Friends subsidiary, a.k.a. Kreation Music (report)
