Macquarie to buy Lotte’s S.Korean transportation card unit

Macquarie Asset Management, part of Australian investment bank Macquarie Group, is set to buy Loca Mobility Corp., Lotte Card Co.’s subsidiary and the second-largest public transportation card operator in South Korea.

Lotte’s board of directors on Wednesday announced their decision to sell Loca to Macquarie. Lotte’s top shareholder MBK Partners Ltd., a North Asia-focused private equity firm, plans to sign a stock purchase agreement on the sale of Loca’s management control on Thursday.

Macquarie is slated to spend 415 billion won ($316.9 million) on the deal, including 400 billion won to buy 100% of Loca’s existing shares and 15 billion to purchase new stocks for facility investment.

Macquarie is set to raise more than half of the money through blind funds and other means, while Samsung Securities Co. is set to provide the rest through acquisition financing.

FOR STABLE PROFITS

The world’s largest infrastructure manager targets South Korea’s pre-paid transportation card business, which provides operators with stable profits given the high entry barrier to newcomers.

Loca, which manufactures pre-paid transportation cards and payment terminals, accounted for 37% of the South Korean market, following the dominant player TMoney Co. with a 60% share.

Loca reported an operating profit of 24.6 billion won in 2022, 37.6% higher than the previous year, with sales up 10.4% to 181.2 billion won.

MBK, which had sought to unload its entire stake in Lotte, decided to sell Loca as the PE firm has yet to find a buyer for the credit card issuer due to higher interest rates.

The deal with Macquarie is likely to help potential buyers spend less on the acquisition of Lotte while increasing capital for the credit card issuer to cope with potential liquidity problems.

Write to Dong-Hun Lee at leedh@hankyung.com
 
Jongwoo Cheon edited this article.