Hyundai Card has asked banks to pitch proposals for a potential IPO and expects to receive the proposals from banks by October 22.
On Tuesday, Hyundai Card, the credit card unit of Hyundai Motor Group, disclosed it is preparing for a potential initial public offering and has asked banks to submit proposals this month for the same.
The potential deal could value Hyundai Card at around $2.1 billion (2.5 trillion won) and is intended to help investors such as Affinity Equity Partners, GIC and AlpInvest exit the firm, said a report from the Maeil Business Newspaper.
“We are considering an IPO to expand capital in a stable manner and enhance management transparency,” said a spokesman from Hyundai Card while adding it expects to receive proposals by October 22.
With a 36.96% stake, South Korea’s top automaker, Hyundai Motor, is Hyundai Card’s biggest shareholder. Affinity Equity Partners also has a stale of 9.99%, followed by GIC’s stake of 9% and AlpInvest’s stake of 5%. These three had bought their stakes from General Electric in 2017.
Led by Ted Chung, brother-in-law of Hyundai Motor Group heir apparent Euisun Chung, Hyundai Card saw its operating profit fall by 22% to 202.3 billion won in 2018.
In August 2019, the company had issued a profit warning stating it will be difficult to improve profitability significantly this year, citing an uncertain economic outlook and government measures to curb high household debt.
Incidentally South Korea’s credit card market is a mature one, with credit card payments accounting for 70% of total payments; competition in the market is also intensifying from banks.