Shinsegae interested in Hyundai Card

By Kim Yoo-chul

Shinsegae Group has plans to acquire a major stake in Hyundai Card, sources familiar with the matter said Wednesday.

“General Electric (GE), which owns a 43 percent in Hyundai Card, has approached Shinsegae to unload its stake in the card affiliate of the Hyundai-Kia motor group under authorization from Hyundai’s top management,” a source said. “Working-level discussions are currently under way.”

Hyundai Motor Group holds the largest stake of Hyundai Card with 53.98 percent, including Hyundai Motor’s 36.96 percent, Kia Motors’ 11.48 percent and Hyundai Commercial’s 5.54 percent.

The move comes a few days after the Korea Customs Service issued an operating license to Shinsegae Group, a local retail and distributer operating department stores across the country, allowing it to open a duty free shop in downtown Seoul’s busy Myeongdong district.

“The deal is estimated to be worth about 1 trillion won including a management premium, which isn’t that bad for Shinsegae given its keen interest in expanding its mobile payment business,” said the source.

GE wants to sell its stake in Hyundai Card and Hyundai Capital after it declared its intention to drop its financial business in April this year.

In 2004, GE invested 678 billion won to acquire the stake in the credit card company.

According to officials in the local financial industry, GE had previously approached J Trust and NH Nonghyup. But talks with those companies failed, as the acquisition price was “too high.”

Shinsegae has been increasing its footsteps in the local mobile payment market after the launch of its Shinsegae Pay system.

On a related note, Shinsegae teamed up with Hyundai Card in May this year to introduce the E-Mart e-Card.

Shinsegae was the first company to introduce a credit card system in Korea, allowing customers to pay for their purchases by card in the company’s department stores. But the group sold off this business in the late 1990s.

Later, the company established Shinsegae Finance to enter the card market, which ended in failure.

Samsung Group was seen as one of the potential buyers for the credit card company; however, Samsung said it has no plans to acquire a stake in Hyundai Card.

Officials at Shinsegae were unavailable for comment.