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| The AJ Sellcar Auction in Anseong, Gyeonggi Province / Courtesy of AJ Sellcar |
By Park Jae-hyuk
VIG Partners has begun to speed up efforts to keep up with Hahn & Company (Hahn & Co.) in the nation's used-car trading platform market which is likely to face intensifying competition after Hyundai Motor and SK hinted they may enter the sector.
The fierce rivalry between the two domestic private equity firms (PEFs) is considered to have resulted from their ongoing attempts to enhance the value of their portfolio companies, intended for smoother exits in the future.
According to a recent regulatory filing by AJ Networks, AutoPlus was selected as the preferred bidder to buy a 77.29 percent stake in AJ Sellcar, the third-largest used-car trading platform here. The sale price was estimated at below 100 billion won ($88 million).
AutoPlus is the second-largest platform, which VIG acquired in 2017 for 60 billion won ($52 million). It is expected to pursue an expansion using the AJ Sellcar Auction in Anseong, Gyeonggi Province.
Market observers are paying attention to the PEF's latest decision, wondering whether this can serve as a new variable in the domestic second-hand car trading platform market.
The local market has long been dominated by K Car which changed its name from SK Encar after Hahn & Co. bought it in 2017 for 205 billion won.
Hahn & Co. has continued to enhance the value of K Car through "bolt-on" acquisitions which refer to the acquisition of smaller companies, usually in the same line of business.
In 2018, the buyout firm acquired Joy Rent A Car from CJ for about 50 billion won to use K Car's second-hand cars as rentals. It also entered the used-car finance market that year by setting up K Car Capital.
Based on these moves, K Car became the nation's first used-car trading platform operator to post more than 1 trillion won in annual sales last year.
After Hyundai Motor announced it would start a used-car business during a National Assembly audit last month, however, concerns have arisen that the PEFs may face difficulties in retrieving their investments in such businesses due to a possible decline in profits.
Moreover, SK can also reenter the market because Socar is considering selling second-hand cars. SK is the ride-hailing service firm's second-largest shareholder owning a 23.87 percent stake.
Some analyst say the PEFs may try to sell their used-car businesses to the conglomerates after increasing their value, rather than engaging in a cutthroat competition with the larger companies.
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