Lotte Group is selling its financial subsidiary, Lotte Capital, to its Japan-based subsidiary. Accordingly, the group has sold all of its financial subsidiaries to meet the regulatory requirements of the Monopoly Regulation and Fair Trade Act.
Lotte Corp., the holding company of Lotte Group, said on Sept. 23 that its board of directors has decided to sell its 25.64 percent stake in Lotte Capital Co. to Lotte Financial Corp. in Japan for 333.20 billion won (US$279.18 million). Separately, the board of Lotte Engineering & Construction Co. agreed to sell an 11.81 percent stake in Lotte Capital for 153.50 billion won (US$128.61 million).
The deals allow Lotte Group to meet the requirements of the Monopoly Regulation and Fair Trade Act which prohibits a holding company from owning financial affiliates. A Lotte Corp. official said, “After the introduction of the holding company system in October 2017, we have continued to make efforts to abide by the relevant law.” The group has sold its financial subsidiaries before the Oct. 11 deadline.
Previously, Lotte Group chose the Woori Bank-MBK Partners consortium as the buyer of Lotte Card Co. and South Korea’s top buyout private equity fund (PEF) JKL Partners as the buyer of Lotte Insurance Co.
When Lotte Group completes sales of Lotte Card and Lotte Insurance, it will secure nearly 2 trillion won (US$1.67 billion) of cash. This would allow the group to strengthen its financial soundness and push for the listing of Hotel Lotte.