Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Will Hyundai Card's failure to enter Vietnam affect its IPO?
Hyundai Card headquarters in Seoul / Korea Times file
By Park Jae-hyuk
By Park Jae-hyuk
Hyundai Card is facing concerns over possible postponement of its initial public offering (IPO), after its first attempt to make a direct entry into a foreign market has ended in failure.
The credit card unit of Hyundai Motor Group eventually canceled its contract with Vietnam Maritime Commercial Joint Stock Bank (MSB). It had signed the deal in 2019 with the intent of acquiring a 50 percent stake in Finance Company Limited for Community (FCCOM) for 49 billion won ($43 million).
“Following the outbreak of the COVID-19 pandemic, the major shareholders of Hyundai Card changed their business direction in Vietnam and Asia, so the deal was not completed,” MSB General Director Nguyen Hoang Linh said at the bank's general shareholders meeting, Wednesday, according to local newspapers. “Hyundai Card gave partial compensation to us.”
The Korean card firm's attempt to enter the Vietnamese market was interpreted as a part of its efforts to raise its valuation before the IPO by discovering new income sources in Southeast Asia.
According to industry sources, the company has sought to go public over the past few years because a consortium of foreign investors, including Affinity Equity Partners, GIC and AlpInvest Partners, demanded its listing within four years, when they took over a 24 percent stake in Hyundai Card from General Electric for 370 billion won in 2017. Hyundai Motor Group reportedly promised the consortium at that time that it would list Hyundai Card by January 2020.
The card firm is said to have hired NH Investment & Securities and Citigroup Global Markets Korea Securities as its lead underwriters in 2019, but its IPO had been expected to take place this year, given that Hyundai Card CEO Chung Tae-young told the Financial Times in 2019 that he wanted the listing to be deferred until 2021 to reach a more favorable IPO price.
Some market observers regarded the card firm's recent collaborations with various other companies to release private label credit cards (PLCCs) as alternative ways of raising its valuation, amid lingering difficulties in its overseas expansion due to the pandemic. Chung, however, denied any correlation between the PLCCs and his company's IPO.
“An IPO is a kind of money game,” he wrote on Facebook last October. “If the management drives a company from the perspective of a money game, it will lose its long-term judgment and precious time for innovation. Doing so is not good for shareholders.”
In response to the concerns over a possible delay in the IPO, a Hyundai Card official denied that the disrupted deal had any impact on the plan, adding that the specifics about its listing are still up in the air.