SEOUL/HONG KONG Aug 22 Private equity firms
Affinity Equity Partners and CVC Capital Partners are
among potential bidders for South Korea's No. 1 car rental
company, KT Rental, in a sale expected to fetch
around 800 billion won ($786 million), people familiar with the
matter said on Friday.
KT Rental parent KT Corp, South Korea's No. 2
telecom company, announced the sale in June, the latest disposal
in a series of non-core assets being sold off by sprawling South
Korean conglomerates. Bankers say the trend will likely lure
private equity firms, flush with capital and looking to invest
in one of Asia's hottest markets for mergers and acquisitions.
KT is also selling loan servicing arm KT Capital
, while Hanwha Group recently sold drug unit
DreamPharma. POSCO is seeking to sell
assets including POSCO Specialty Steel, while the
Hanjin and Hyundai groups are also selling assets to improve
their balance sheets.
Private equity-backed M&A deals in South Korea have reached
$16.9 billion thus far this year, already surpassing 2013's
$11.6 billion and accounting for more than half of all such M&A
deals in Asia in 2014 so far.
Affinity was not available for comment, while CVC declined
The people familiar with the matter said other unidentified
potential bidders are considering offers. The people declined to
be identified as they were not authorised to speak to media.
South Korean online publication Edaily and other media have
reported other potential bidders include SK Networks
, which has its own auto rental business, and retail
giant Lotte Group.
An SK Networks spokesman said nothing had been decided on
whether to participate in bidding. A Lotte spokesman could not
be reached for comment.
KT Rental said in a filing it had a 26 percent share of
South Korea's car rental market in the second quarter. The
company had an operating profit of 97 billion won last year,
with an 11 percent operating margin sure to the catch the eye of
"The car rental business is stable. It's basically
asset-backed and the market is steadily growing. All the buyer
needs to do is not pay too much," said Han Byung-hwa, an analyst
at Eugene Investment & Securities.
The country's giant 'chaebols', or family-owned
conglomerates, are selling non-core assets, drawing lessons from
the 2012-2013 collapse of mid-tier peers like Woongjin and Tong
Yang, which failed to slim down quickly after ambitious
expansion left them saddled with heavy debts following the 2008
global financial crisis.
"South Korean chaebols are trying to streamline their
portfolio. There may be decent M&A opportunities in the coming
three years in relation to such chaebols' strategic
initiatives," said Jangho Park, CEO and head of investment
banking at Citigroup Global Markets Korea told Reuters.
Credit Suisse is advising KT on the sale.
(1 US dollar = 1,017.5500 Korean won)
(Reporting by Stephen Aldred and Joyce Lee; Additional
reporting by Hyunjoo Jin; Editing by Kenneth Maxwell)