The Swing to acquire controlling stake in Tada operator

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The Swing to acquire controlling stake in Tada operator

Published: 18 Jul. 2023, 18:45

A Tada vehicle on the street of Jung District, central Seoul, on June 1 [NEWS1]

The Swing, an e-scooter sharing service operator, will acquire a controlling stake in van-hailing service Tada's operator, as it develops itself into a comprehensive mobility company.

The Swing will buy a 60 percent stake in VCNC from fintech firm Toss, a spokesperson confirmed on Tuesday. The price of the acquisition was not disclosed, although media reports speculate it to be around 24 billion won ($19 million).

Car rental startup Socar, which formerly owned a majority stake in VCNC, will hold the remaining 40 percent stake.

The acquisition is "going in a positive direction" but has yet to be finalized, the spokesperson said.

However, the spokesperson added that Socar is asking for a bigger stake in The Swing because the car rental startup previously loaned 7 billion won to VCNC, with the maturity date for 5 billion won of the loan amount expiring in February.

Socar is asking for an unspecified amount of The Swing shares to cover the loan and added interest for VCNC's loan, as well as a place on the startup’s board.

“Even with the additional shares, it will be difficult for Socar to get a place on the board,” he said. “The board of directors at our company consists of five members, three of whom are outside directors. Even if Socar hypothetically transits its loan to a stake of our company, they will not be among the top three largest shareholders of The Swing.”

VCNC, on the other hand, is in dire need of management restructuring as it is on shaky ground after the suspension of its main service. The operator has already slashed its workforce by half, according to media reports.

The operator is going through intensive restructuring as it is yet to find a new revenue stream after its main moneymaker, the Tada Basic service, was terminated in 2020.

Tada Basic service offered 11-to-15-seat vehicles, along with a driver. VCNC used rental cars from Socar and matched drivers with app users.

Tada Basic service took off with some 1.7 million users within a year of its launch and was a popular transportation option. However, it faced strong opposition from taxi driver unions, leading lawmakers to pass a revision to the Passenger Transportation Service Act that essentially outlawed the service in 2020.

The service was suspended the same year as a result.

Socar was founded by former CEO Lee Jae-woong in 2011. who launched Tada in 2018 along with Socar affiliate VCNC. After the revised bill was passed, online bank Toss took over VCNC in 2021.

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]