Key Points:
- Affinity Equity Partners will acquire SK Rent-a-Car Co. for $572 million, signaling a resurgence in South Korean acquisitions.
- SK Networks selects Affinity as the preferred bidder over competitors. The deal provides liquidity to SK Group and streamlines its portfolio.
- SK Networks aims to pursue acquisitions in the AI sector, having recently invested in AI startup Upstage Co. and acquired data management firm en-core Co.
- Following the SK Rent-a-Car deal, Affinity is eyeing further acquisitions in South Korea, leveraging its new leadership under Partner Min Byung-chul.
Affinity Equity Partners is poised to acquire SK Rent-a-Car Co., South Korea’s second-largest car leasing company, for approximately 800 billion won ($572 million). After a three-year hiatus, the move signals expectations of a renewed acquisition in the country under Affinity’s new leadership.
SK Networks Co., a subsidiary of South Korea’s SK Group, has selected Affinity as the preferred bidder to purchase a 100% stake in SK Rent-a-Car. The deal encompasses the company’s estimated corporate value of around 3 trillion won, including its debts of 2 trillion won.
Competing against firms such as Glenwood Private Equity Co. and IMM Private Equity Inc., Affinity emerged victorious with a higher bid, securing the nod from SK Networks. The planned transaction will be formalized through a memorandum of understanding with the Hong Kong-based investment firm.
Previously, SK Networks acquired a 42% stake in AJ Rent-a-Car for 300 billion won in 2019, subsequently merging it with its car rental business to establish SK Rent-a-Car. Following a public tender offer last year and a subsequent share swap in January, SK Networks transformed SK Rent-a-Car into a wholly owned subsidiary.
Despite SK Rent-a-Car’s robust financial performance, including a 28.3% increase in operating profit to 122 billion won in 2023, SK Networks has opted to divest the unit. This decision aligns with SK Networks’ strategic shift towards becoming an investment firm specializing in artificial intelligence. With the proceeds from the sale, SK Networks aims to pursue acquisitions in the AI sector, having recently invested in domestic AI startup Upstage Co. and acquired data management firm en-core Co.
The transaction is expected to inject much-needed liquidity into SK Group, which has been divesting non-core assets to bolster its financial position. Furthermore, it allows SK Group to streamline its portfolio, as SK Rent-a-Car reportedly failed to synergize with other group entities.
Affinity Equity Partners’ acquisition of SK Rent-a-Car marks its return to the South Korean market under new leadership. The deal follows Affinity’s previous acquisitions, including purchasing South Korea’s No. 2 food delivery platform Yogiyo in 2021. Investment banking industry sources anticipate Affinity will pursue further acquisitions in South Korea following the SK Rent-a-Car deal. This move comes after Partner Min Byung-chul assumed leadership of Affinity’s Seoul office last year, signaling a fresh chapter for the firm in the region.
