Four private equity funds are vying for the 43 percent stake in Hyundai Card Co., offered for sale by the credit card company’s second largest shareholder General Electric Capital. GE Capital and its lead managers Goldman Sachs and Morgan Stanley will decide on a buyer around mid-September.

According to the investment banking industry on Thursday, overseas funds Affinity Equity Partners and Pacific Alliance Group (PAG) as well local counterparts H&Q Asia Pacific and CVC Capital Partners have been conducting due diligence to prepare their bid.

GE Capital bought the stake in Hyundai Capital Services Inc. in 2004 and Hyundai Card in 2005 as a part of strategic alliance with Hyundai Motor Group. The venture agreement has terminated in 2014, and the U.S.-based GE last year decided to withdraw from financial business that included sale plan on the interest in Korean credit card company.

The shares are expected to fetch over 700 billion won ($628 million) as the 43 percent stake in Hyundai Card would be valued at about 760 billion won when applying price-to-book ratio (PBR) of listed Samsung Card Co. to Hyundai Card.

GE prefers to sell the shares in lump sum, but is open to the option of selling them in pieces to several investors.

Equity funds are expected to form consortium to divide the share and avoid legal hassle. Under the local law, a private equity fund with stake in a credit card company exceeding 10 percent comes under the scrutiny by the financial authority for eligibility for a large shareholder. A foreign entity would be found eligible when it has experience of running financial operations in overseas.

Hyundai Motor, the largest shareholder in the credit card company, would likely play a role in the tender as bidders may demand initial public offering or tag-along right as a condition to their buyout offer.

By Kim Hyo-hye

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