South Korea’s Hyundai Card is set to acquire a 50 per cent stake in FCCOM, a consumer finance company led by Vietnam-based mid-range lender Maritime Bank (MSB), for nearly 49 billion won ($42 million).
The joint venture, that marks Hyundai Card’s first overseas market entry, is touted as the new growth engine in the Southeast Asian market, according to an announcement.
The share purchase is expected to be completed by the first quarter of 2020, with the joint venture operation commencing in the second half, Hyundai Card said.
The financial arm of carmaker giant Hyundai Motor will provide financial know-how, while MSB will be responsible for sales and operations of the joint venture.
The company also plans to expand its business from the current core of personal finance to credit card, car financing and corporate finance.
It also hopes to create synergies with the existing business in Vietnam of Hyundai and Kia Motors, which accounted for the largest share (32 per cent) of the Vietnamese auto market in 2018. Car sales last year also nearly doubled the volume from 2015, Hyundai Card said.
“Vietnam is one of the fastest-growing economies in Southeast Asia, and is a key country in our government’s new southern policy. The country is also attractive thanks to its young, abundant labour force and large domestic market of nearly 100 million people,” it added.
The company cited data that Vietnam’s private lending market was growing at an impressive annual rate of 60 per cent, with the number of credit card users hitting about 7.4 million last year, representing an increase of more than 27 per cent year-on-year.
Before Hyundai Card, a spate of other South Korean financial players have penetrated this fast-growing market. Lotte Card acquired Techcom Finance in 2017 and launched Lotte Finance in the Southeast Asian country several months ago. Shinhan Card has also acquired Prudential Vietnam in a $150-million deal.
In addition to Korean investors, Japanese companies have also forayed in the space, such as Credit Saison and Shinsei Bank forming joint ventures with Vietnamese lenders HD Bank and Military Bank.