Hyundai Card shelves IPO after Fubon buys 20% stake

South Korea’s Hyundai Card Co. has shelved a plan to go public after Taiwan’s Fubon Financial Holding Co. completed the purchase of its 20% stake from a consortium led by Affinity Equity Partners, a Hyundai Card official said on Friday.

The Taiwanese group's two units Fubon Bank and Fubon Life Insurance Co. have bought a 9.99% stake in Hyundai Card, respectively, between February and May of this year, which led to the Affinity-led group's exit from the Korean company.

“Now that Fubon Financial becomes our strategic investor, we will put aside an IPO plan,” said the Hyundai official.

The Affinity-led consortium had sold another 4% stake in the card issuer to Hyundai Commercial Co. for 86.9 billion won back in February.

In 2017, Affinity and two other investors – Singapore’s sovereign wealth fund GIC and AlpInvest Partners, which is owned by Carlyle Group – bought a combined 24% stake in Hyundai Card from GE Capital for around 380 billion won. The investment was made on the condition that the card company would go public by the end of 2021.

Based on the purchase price paid by Hyundai Commercial, Fubon Financial Group is believed to have paid 434 billion won ($342 million) for the 20% stake in Hyundai Card.

From the exit worth a combined 520 billion won ($410 million), Affinity reaped more than 100 billion won in capital gains.

The Affinity-led group had pushed for Hyundai Card’s IPO, which faced headwinds due to weak market conditions in the wake of the COVID-19 pandemic.

With the stake purchase, Fubon Financial will participate in the Hyundai Card’s management as a strategic investor, Hyundai said.

Hyundai Motor Co. is the largest shareholder in the card firm with a 36.9% stake, followed by Hyundai Commercial with a 28.5% stake.

Fubon Financial entered South Korea in 2018 after acquiring a majority stake in Fubon Hyundai Life Insurance Co., previously known as Hyundai Life Insurance, from the Hyundai Motor Group. Fubon Life holds a 77.6% stake in the Korean life insurer.

Fubon Financial bets on Hyundai Card's private label credit card (PLCC) business and branding capability, the official said. A PLCC is a card issued under a partnership with a specific brand or store to benefit and reward its users when used for the store.

Hyundai Card is South Korea's No. 3 independent card company after Lotte Card and Samsung Card.

Meanwhile, MBK Partners has put its majority stake in South Korea's Lotte Card Co. up for sale, hoping to fetch over 3 trillion won from the sale.

Write to Yu-Jin Jung at jinjin@hankyung.com
Yeonhee Kim edited this article