Lotte Card's solid growth draws interest from would-be buyers
Lotte Card headquarters in central Seoul / Courtesy of Lotte Card
By Anna J. Park
As Lotte Card has been posting impressive growth and annual earnings over the past couple of years, market rumors about its possible M&As have continued to spread in the investment banking industry lately.
However, MBK Partners, the largest shareholder of the card company since 2019, has denied the rumors that it is considering its sale. Rather, the private equity firm stressed that it is more focused on Lotte Card's successful digital transformation than ever.
“Actually, MBK Partners hasn't yet considered the sale of Lotte Card on the M&A market for the time being. Also, it's not true that any proceedings or negotiations are currently ongoing regarding the sell-off of the card company,” an official from the private equity firm told The Korea Times.
“With Lotte Card's solid growth and earnings, MBK Partners is now placing its priority in supporting the card company's ongoing digital transformation process, aiming to successfully turn it into a digital financial platform,” the official explained, adding that Lotte Card's employees have been passionately putting their best efforts into shaping up the company with an ownership mindset.
The private equity firm bought a 59.83 percent stake in Lotte Card in 2019 and has since been focusing on raising its corporate value by enhancing its profitability. Under MBK Partners' ownership, Lotte Card's annual net profit has increased by five times to 241.4 billion won last year from 51.7 billion won logged in 2019.
Yet, the official didn't deny that there is currently a lot of market interest in the card company's potential sale. With Lotte Card taking 10.3 percent of the local credit card market, there are many would-be buyers aiming to strengthen their market dominance.
As of the end of last year, Shinhan Card took up 20.9 percent of the local card market as the country's top player, followed by Samsung Card with 18.5 percent, Hyundai Card with 16.9 percent and Lotte Card with 10.3 percent. Woori Card and Hana Card's market shares stood at 9.2 percent and 7.3 percent, respectively.
Based on the current status of each player in the local card industry, market watchers speculate that Woori Financial Group and Hana Financial Group would be most likely to take an interest in the potential sale of Lotte Card, if they wish to strengthen their card subsidiaries' market positions.
Given that Woori Financial Group already holds a 20 percent stake in Lotte Card as its second-largest shareholder, some watchers say its card business could rise to the country's No.2 position with nearly a 20 percent market share in the local credit card industry, if it acquires Lotte Card.
However, an official from Woori Financial flatly denied the speculation, saying: “There have been no discussions or considerations about a possible M&A deal, as of now.” The official added that the financial group's current priority is placed more on any potential acquisition of a brokerage company, rather than a card company.
Hana Card is also mentioned as a strong potential would-be buyer of Lotte Card, if it were to ever be put up for sale. If it acquires Lotte Card, its market share will rise to 17.6 percent, making it the country's third-largest card business.
“While there have been many media reports about Hana Card's interest in the potential acquisition of Lotte Card, there's nothing we can confirm about the issue,” an official from Hana Financial Group said.