Lotte Rent-a-Car's Jeju Auto House. [Provided by Lotte Rental]
Lotte Rent-a-Car's Jeju Auto House. [Provided by Lotte Rental]

Global private equity firm TPG is set to acquire Lotte Rental, South Korea's top car rental company.

According to investment banking industry sources Wednesday, TPG signed a share purchase agreement Tuesday to acquire a 61.17 percent stake in Lotte Rental. The acquisition covers a 38.14 percent stake held by Hotel Lotte and a 23 percent stake held by Busan Lotte Hotel. TPG will invest a total of 1.3 trillion won ($919 million) to take control of the company. The deal is expected to close this year, pending a business combination review by the Korea Fair Trade Commission and the settlement of remaining payments.

The signing comes roughly three months after Lotte Group's share purchase agreement with Affinity Equity Partners fell through in May. TPG moved quickly after the Fair Trade Commission blocked Affinity Equity Partners' acquisition of Lotte Rental in January.

Lotte Group had earlier signed a deal to sell Lotte Rental to Affinity, but the Fair Trade Commission intervened. It cited concerns that the deal would substantially restrict competition, given that Affinity already owned SK Rental, the country's second-largest car rental operator. After Affinity's bid collapsed, TPG and Han & Company were among the firms that began exploring a purchase of Lotte Rental.

Industry insiders say TPG gained the upper hand largely because of its ability to see the deal through to completion. The firm is understood to be financing the entire 1.3 trillion won acquisition price through equity, with no acquisition debt. The simplified deal structure — buying only existing shares held by Hotel Lotte and Busan Lotte Hotel, with no new share issuance — is also seen as a factor in its favor.

For TPG, the deal marks its first major bet on a domestic mobility company in roughly nine years, since its investment in Kakao Mobility. TPG joined a consortium with Korea Investment Partners and Orix PE in 2017 to invest about 500 billion won in Kakao Mobility, then added 140 billion won in 2021 to become its second-largest shareholder. With this acquisition, TPG expands from mobility platform investment into physical mobility assets, adding a vehicle rental and fleet management operator to its portfolio.


park.jiyeong@heraldcorp.com