Big Hit Entertainment, the label of global K-pop sensation BTS, is focusing on its platform business after a series of merger and acquisition (M&A) deals involving smaller firms produced few market synergies and limited benefit for its revenue.

However, some observers believe the firm already has enough platform investments as it looks for ways to use its initial public offering (IPO) proceeds of 500 billion won.

The company recently invested 70 billion won ($62 million) in YG Plus, a subsidiary of YG Entertainment, one of the biggest K-pop agencies in South Korea, to secure a stable platform. YG Plus will support Big Hit’s music distribution and merchandising business. Big Hit has already outsourced its music distribution to Dreamus Company.

“When listing its shares, Big Hit announced that it will enter platform businesses using the IPO proceeds,” said an industry source, adding, “The deal will also be positive for YG Plus as its liquidity will improve thanks to an injection of new cash and new distribution contracts.”

Aiming to secure a new value chain, Big Hit also announced that its fan community subsidiary beNX will take over fan community platform V Live, which is operated by Naver, one of the nation’s biggest tech conglomerates.

Big Hit’s recent moves signal a departure from its focus on diversifying its artist portfolio by acquiring smaller agencies like Source Music and Pledis Entertainment.

Some industry observers said Big Hit turned its attention to the platform business because its acquisitions of smaller agencies created limited synergies, while the company needs to diversify its profit model as an entertainment agency. Big Hit seems to be aiming at strengthening its foothold in license and platform businesses.

Big Hit also learned from efforts by rivals SM Entertainment and YG Entertainment to diversify their businesses to restaurant business, which left them with losses.

“Big Hit’s acquisitions of smaller agencies haven’t boosted its earnings,” said an industry source. “It has tried to invest in platform businesses as SM and YG already set precedents of making losses in restaurant or actor management businesses.”

Some market insiders said it is uncertain how Big Hit will use its IPO proceeds, as it has made enough platform investments. Bit Hit will have a global membership of 50 million if its fan community platform Weverse is integrated with Naver’s V Live and the firm won’t have to outsource merchandising as it has joined hands with YG Plus.

Big Hit may invest the proceeds in bigger rivals or foreign agencies, but it is not clear whether possible talks with other big entertainment agencies will go smoothly. (Reporting by Ik-hwan Choi)