Buyers for 2 finance units of Lotte are identifiedPotential buyers have been identified for Lotte Card and Lotte Insurance, both local private equity firms.
According to Lotte Corp. and Citigroup Global Markets Korea Securities (CGMK), which is helping the group with the sale of its subsidiaries, Hahn & Company was selected as the potential buyer of the retail giant’s credit card business while JKL Partners was chosen as the buyer for the insurance unit.
Lotte Group said it has made decisions not only on the price for the units but also on factors such as job security of the employees.
It said it considered whether potential buyers had the potential to expand the two companies’ businesses through synergies as well as the their management capabilities.
Lotte intends to hold onto a 20 percent stake of Lotte Card after the sale of the controlling stake.
Lotte said it wanted to continue business partnerships between its retail affiliates such as Lotte Mart and the credit card company after the sale.
The value of Lotte Card is estimated at around 1.8 trillion won ($1.5 billion), and an 80 percent stake in the company is expected to be sold to Hahn & Company for 1.4 trillion won.
JKL Partners is reported to have offered to purchase a 58.5 percent stake in Lotte Insurance for 427 billion won. The insurance company is valued at around 730 billion won.
The sales are expected to be finalized around July and August if due diligence and government approval go as planned.
Lotte Corp. said in a statement that the selling of the credit card and insurance companies was necessary for it to be made a holding company under the requirements of the Fair Trade Act.
In October 2017, Lotte Group launched Lotte Corp. as its holding company. Under the law, it has to sell all of its financial affiliates within two years.
Lotte Corp. accepted bids for the credit card and insurance companies on April 19.
Bidders for the credit card company included Hana Financial Group, Hanwha Group, MBK Partners and IMM Private Equity.
The market expected either Hana Financial Group or MBK Partners, which partnered with Woori Bank, to be the winner.
Taiwan’s Fubon Financial and Japan’s Unison Capital were said to have bid for the insurance company along with JKL Partners.
BY LEE HO-JEONG [firstname.lastname@example.org]