[Exclusive] Hyundai Card drops IPO plan

16-Sep-2021 Intellasia | Koreaherald | 5:02 AM Print This Post

Fubon-backed Hyundai Card said Wednesday that it has “no plan” to carry out an initial public offering, despite heated market anticipation for the firm’s market debut over the last two years.

“We do not have a plan to carry out an IPO,” a Hyundai Card spokesperson told The Korea Herald.

“Regarding the latest deal involving Fubon Group and (the former shareholders led by) Affinity Equity Partners, we have already made a decision to rule out an IPO.”

The credit card firm was under an IPO mandate under a contract with minority shareholders, comprising private equity firms Affinity Equity Partners, GIC Private Equity and AlpInvest Partners. The contract no longer exists after Affinity Equity Partners sold some of its stakes to the firm’s new shareholdersTaiwan’s Fubon Life Insurance and Fubon Commercial Bankin August.

The spokesperson declined to confirm if there was any change in contract with its IPO underwritersNH Investment & Securities, Korea Investment & Securities and Citigroup Global Markets Korea Securities.

This comes two years after Hyundai Card first made its IPO plan public in October 2019 and has sought to target its company valuation at over 2 trillion won ($1.7 billion won).

Over the course of two years, however, the Hyundai Motor conglomerate’s consumer finance arm’s attempts to navigate a more favourable IPO price have foundered.

Hyundai Card has been unable to boost its value as its domestic market growth potential is subdued, while plans to expand overseas have also fallen to pieces.

In January next year, Korea is expected to reduce merchant fees for credit card processing, while the nation is coming up with loan regulations to curb asset overheating, coupled with a lowered cap on lending rates in July, from 24 percent to 20 percent.

Both would affect all domestic credit finance firms’ profitability, nearly offsetting an increase in credit card spending on a pent-up demand amid signs of recovery from the pandemic.

This resonates with Hyundai Card, which earned 221.8 billion won in the first half of the year, up 3.7 percent on-year. Separately, Hyundai Card’s only firm that it controls a majority stake in, payment gateway service provider Blue Walnut, has been in the red for the past four years until 2020.

Taking the domestic credit market uncertainties into account, Hyundai Card vice Chair Chung Tae-yong has been eyeing opportunities for overseas expansions to boost profitability, but to little avail.

Hyundai Card earlier in March withdrew its proposed acquisition plan for Vietnam’s credit finance company due to what it said would be a time-consuming process and COVID-19 uncertainties.

The Vietnam Maritime Commercial Joint Stock Bank’s consumer finance arm FCCOM said Hyundai Card had changed their business direction in Vietnam and Asia, forcing it to give up on an earlier plan to offload a 50 percent stake in FCCOM. FCCOM is now reportedly looking for a new strategic investor to purchase a 100 percent stake and is targeting to close the deal by 2022.



Category: Korea

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