After receiving the approval from the Vietnamese government, Lotte Card yesterday signed a purchase contract to acquire 100 per cent of Techcom Finance from Techcombank to become the first South Korean credit card company to enter the Vietnamese finance market, according to newswire Vneconomy.
The deal’s value has yet to be disclosed, however, previously, South Korean newswire The Investor estimated that the deal could be valued at VND1.7 trillion ($74.67 million).
Lotte Card’s purchase is considered a move to break into the $26.55-billion consumer finance market, which has been showing signs of rapid development.
Previously, in September 2017, the two parties signed a stock purchase agreement for the deal.
Techcom Finance, formerly known as Vietnam Chemical Finance Joint Stock Company before the 2015 acquisition by Techcombank, carries a charter capital of VND600 billion ($26.5 million).
According to the bank’s report, in 2017, Techcom Finance earned VND28.7 billion ($1.26 million) in revenue and VND22.5 billion ($998,538) in pre-tax profit.
Lotte Card was established in 2002 and offers credit cards, facility leasing, and financial services. The company, through its subsidiaries, also opens travel agency, insurance agency, and telemarketing services.
Entering Vietnam, Lotte Card will join a vibrant consumer finance market with an annual growth of 30-40 per cent, while the credit card rate is still very low.
StoxPlus reports that the Vietnamese consumer finance market is the most attractive in the region, with high growth potential and profit margins.
At present, the sector is dominated by FE Credit (VPBank), Home Credit, and HDSaison.
In 2016, Home Credit earned VND1.23 trillion ($54.03 million) in profit, FE Credit VND2 trillion ($87.8 million), and the two remaining companies (Home Credit and HDSaigon) earned hundreds of billions of dongs in profit.
Along with Lotte Card, numerous domestic and foreign investors are actively seeking to enter the consumer finance market through M&A deals.
According to the latest movement, in January this year, Shinhan Financial Group announced that subsidiary Shinhan Card completed the acquisition of Prudential Vietnam Finance Company Ltd.
In addition, two other Japanese investors are also negotiating to purchase 49 per cent of the stakes in two different Vietnamese financial institutions.
Military Bank has launched its consumer lending brand Mcredit with the support of its Japanese counterpart Shinsei Bank. At the end of last year, Shinsei Bank purchased a 49-per-cent stake in Mcredit, the consumer finance arm of Military Bank. Afterwards, MCredit was renamed MB Shinsei Consumer Finance Limited Liability Company.
Source: Ha Vy