The two South Korean retail giants, Lotte Group and Shinsegae Group increased their asset securitization efforts ahead of the eBay bidding finalization. In particular, Lotte and Shinsegae recently obtained additional funding, even venturing into core real estate for support.
Earlier, Lotte and Shinsegae entered the final eBay Korea bidding, becoming the final prospective buyers. The two companies also submitted their letters of intent to eBay, while eBay chose its preferred bidder. eBay Korea is South Korea’s third-largest e-commerce platform.
According to investment banking sources, Shinsegae is preparing to acquire at least 2 trillion won ($1.8 billion) from local banks. Shinsegae would then use the proceeds to fund the over 3-trillion won ($2.7 billion) worth eBay acquisition.
Shinsegae currently operates E-Mart Inc., a hypermarket chain. Meanwhile, E-Mart manages Starfield City Bucheon, a shopping mall establishment, which opened in 2019 in Seoul. Shinsegae would then use the E-Mart and Starfield City Bucheon-operated core real estate as collateral for the loan.
As part of its e-commerce business expansion, Shinsegae would advance SSG.com’s initial public offering (IPO) scheduled for 2022. SSG.com is Shinsegae’s online shopping platform. Since October 2019, E-Mart has sold 13 store sites and idle areas, raising around 2 trillion won ($1.7 million). Moreover, Shinsegae would combine its recent loan and upcoming IPO earnings with E-Mart’s accumulated funding.
Shinsegae would secure more assets for its affiliate stores, headquarters, and more for its mid to long-term plans. Industry watchers also expect Shinsegae to go beyond the eBay Korea bidding and prepare for further expansion with its extensive fund acquisition.
On the other hand, Lotte obtained around 3 trillion won in its asset securitization proceedings. For instance, Lotte sold its Gangnam-based Lotte Department Store branch to Lotte REIT, Lotte’s real estate investment company, in 2019.
Asset management industry sources also stated that Lotte REIT plans to increase its asset acquisition efforts. Lotte REIT would also sell its department store head office and various Lotte Data Communication centers.
Additionally, Lotte’s fund acquisition coincides with Lotte Chairman Shin Dong-Bin’s goal to strengthen the group’s new ventures. Lotte’s growth-oriented plans include entering the metaverse market and expanding its offline retail businesses.
Notably, Lotte would focus on metaverse-related projects, highlighting its role in the non-face-to-face era, especially in the entertainment and work sectors. Lotte also shared its post-acquisition scheme with eBay after its recent visit to the e-commerce giant’s US head office.
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