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Equity divestment

Affinity exits Hyundai Card, sells stake to Hyundai Commercial, Fubon

The divestment comes as the card issuer’s planned IPO faces headwinds amid the pandemic

By Aug 18, 2021 (Gmt+09:00)

Hyundai Card's headquarters building
Hyundai Card's headquarters building

Affinity Equity Partners, a global private equity firm, and its financial partners have exited from their investment in Hyundai Card Co. by selling a combined 24% stake in the South Korean card firm.

Hyundai Commercial Inc., the financing unit of Hyundai Motor Group, said in a regulatory filing on Tuesday that it is acquiring 6.42 million shares in Hyundai Card, amounting to a 4% stake, from five special purpose vehicles controlled by Affinity, for 86.9 billion won ($74.4 million).

The five special-purpose entities include Consumer Preferred Choice Ltd. and AlpInvest Partners Co-Investments.

Affinity, the Hong Kong-based buyout fund, has sold the remaining 20% of Hyundai Card to Taiwan’s Fubon Financial Holding Co., which will participate in the management of the Korean card firm as its third-largest shareholder and a strategic investor.

Hyundai Motor Co. is the largest shareholder of Hyundai Card with a 36.9% stake, while affiliate Kia Corp. owns 11.5%. Hyundai Commercial’s stake in the card firm has risen to 28.5% following the transaction.

Taiwan's Fubon Financial Holding.
Taiwan's Fubon Financial Holding.

IPO FACES HEADWINDS

The stake sale comes as Hyundai Card’s planned initial public offering faced headwinds amid weak market conditions in the wake of the COVID-19 pandemic.

Affinity and two other investors – Singapore’s sovereign wealth fund GIC Private Ltd., and AlpInvest Partners, which is owned by Carlyle Group – bought a combined 24% stake in Hyundai Card from GE Capital in 2017 on condition that the card company go pubic by the end of 2021.

Industry officials said the buyers chose to exit from their investment in Hyundai Card through a stake sale as market conditions turned unfavorable for an IPO.

Hyundai Card hired NH Investment & Securities Co., Korea Investment & Securities Co. and Citigroup Global Markets Korea Securities Ltd. as underwrites for an IPO in 2019, but little progress has been made since then.

A Hyundai Card official said Fubon decided to invest in the company after taking into consideration the card issuer’s strength in private label credit cards (PLCCs), which offer benefits and rewards under a partnership with specific brands.

Affinity Equity Partners is one of the largest dedicated Asian private equity firms and focuses on leveraged buyout and growth capital transactions.

Write to Chae-Yeon Kim at Why29@hankyung.com

In-Soo Nam edited this article.

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