South Korea’s leading card issuer Hyundai Card Co. is readying to go public on the country’s main Kospi bourse to give its financial investors the opportunity to cash out on their investments two years ago.
According to investment banking sources on Monday, Hyundai Card has invited securities firms at home and abroad to bid to underwrite its initial public offering (IPO) process. Applications will be open until Oct. 22, according to sources.
Hyundai Card is a credit card unit under Korea’s auto conglomerate Hyundai Motor Group. The auto-making giant acquired Diners Club Korea and changed its name to Hyundai Card in 2001. It now is owned 36.96 percent by Hyundai Motor, 24.54 percent by Hyundai Commercial, and 11.48 percent by Kia Motors.
Industry insiders suspect the company has embarked on the IPO process to use the proceeds to pay back financial investors, who invested in the company two years ago. Financial investors generally seek to cash in on their investment within four to five years after their investment.
In 2017, an Affinity Equity Partners-led consortium and Hyundai Commercial purchased a combined 43 percent stake in Hyundai Card from GE Capital with each party paying 376.6 billion won ($315.4 million) and 298.1 billion won, respectively.
Following the acquisition, Affinity Equity Partners holds a 9.9 percent stake in Hyundai Card, GIC with 9 percent and AlpInvest with 5 percent, while Hyundai Commercial’s stake jumped from 5.54 percent to current 24.54 percent. This transaction also completely severed the partnership between Hyundai Card and GE Capital.
The enterprise valuation of Hyundai Card is estimated at 2.5 trillion won but could go higher, according to market experts, considering that the current FIs estimated the value of Hyundai Card at 1.6 trillion won when they invested in the company two years ago.
By Kang Woo-seok and Lee Ha-yeon
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]