Lotte Rental Co., South Korea’s top car auto lease and car rental company, announced that it had begun its initial public offering (IPO) listing process. The Lotte mobility unit plans to raise around 400 billion won ($360 million) through the share sale.
Investment banking sources said that Lotte filed its preliminary review to the Korea Exchange. Given the usual processing, industry watchers expect Lotte to receive approval sometime in August. Lotte also plans to list its shares in KOSPI in September.
In October 2020, Lotte Rental indefinitely postponed its share listing plan after experiencing a slow local IPO market. If Lotte Rental’s IPO succeeds, its stock sales could offer financial relief to its parent company, Hotel Lotte Co., which is currently recovering from the pandemic impacts.
Lotte Rental’s investors, including the National Pension Service, also see the IPO and their stake sales as an investment exit. Furthermore, in 2015, Hotel Lotte’s 1.2 trillion won investment obtained South Korea’s most massive car rental company, KT Rental, and rebranded it into Lotte Rental.
Offering Decent Profits
Lotte Rental provides car leasing, car rental services, and used car sales. Lotte Rental’s corporate value could reach about 2 trillion won ($1.8 billion) thanks to its current services. At present, Lotte Rental is South Korea’s largest car rental platform, with a staggering 20% market share.
Compared to its domestic market rival, SK Rent A Car Co., which boasts a 650 billion won market capitalization, Lotte Rental holds a higher enterprise value. Last year, Lotte Rental also recorded a 14.3 billion won operating profit and a 2.3 trillion won revenue.
Moreover, the leading car service platform increased its corporate value by actively upgrading GreenCar. Lotte Rental holds an 84.7% share in GreenCar, its car-sharing unit that supports over 3 million users. In addition to being the country’s second-largest car-sharing platform after SoCar, GreenCar incorporated auto sales into its existing businesses.
Lotte Affiliates Preparing for IPOs
According to Lotte Rental, if its IPO does well, it would follow up the achievement with more IPOs. For instance, Lotte affiliates, including Hotel Lotte, reportedly plan to file for IPOs in the future.
Investment banking industry officials also shared that since 2019, Lotte Group has been preparing for its affiliates’ IPOs by acquiring funding and reshuffling its governance structure. In 2015, Lotte Group prepared for Hotel Lotte’s IPO listing. However, it dropped the plan due to challenging market conditions.
Additionally, other Lotte units, including Korea Seven, Lotte Cultureworks, and Lotte GRS, continue to prepare for their respective IPOs.
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