April 26, 2024

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[THE INVESTOR] CJ Group signed a deal last week to sell its car rental affiliate to Korean private equity firm Hahn & Co. to avoid being subject to government regulations on intra-group investment, according to industry sources on March 30..

Joy Rent a Car is Korea’s 10th-largest car rental service with an annual 5 billion-won operating profit. On March 23, it was sold for 50 billion won (US$4.69 million) to Hahn & Co. Deloitte Anjin is the deal manager.

 

A CJ Group spokesperson confirmed with The Investor that the deal was indeed designed to avoid penalties for favoring subsidiaries. Intra-subsidiary sales at listed affiliates with stakes held by the founding family of 30 percent or more cannot exceed an annual 20 billion won or 12 percent of its annual sales. In 2016, Joy Rent a Car’s deals with CJ affiliates had already reached 18.7 percent of its aggregate sales.

CJ Group Chairman Sohn Kyung-shik -- uncle of CJ heir Lee Jae-hyun -- had the largest 38.28 percent stake in the firm, followed by his eldest son Joo-hong with 31.39 percent.

Hahn & Co. was established in 2010 and manages 4 trillion won of assets. In November last year, it acquired SK Encar, the country’s second-largest offline second-hand car rental firm from SK Holdings.

By Song Seung-hyun (ssh@heraldcorp.com)