[BizHanKook] Lotte Rental, which has left the Lotte Group to join its new owner, global private equity firm TPG (Texas Pacific Group), has entered the process for delisting. As TPG pushes to make Lotte Rental a wholly-owned subsidiary by acquiring the remaining shares, Lotte Rental is expected to exit the stock market approximately five years after its KOSPI listing. Having been a "cash cow" affiliate of the Lotte Group with consistent performance, Lotte Rental is expected to see changes in its management strategy following the change in ownership. With TPG anticipated to pursue large-scale investments and aggressive business expansion, attention is focused on how Lotte Rental will evolve under the wing of a private equity firm.
On the 6th, Lexicon Korea Holdco (Lexicon), the largest shareholder of Lotte Rental, announced that it would conduct a tender offer for Lotte Rental shares from November 6 to December 3. Lexicon is a special purpose company (SPC) established by TPG to acquire Lotte Rental. The purpose of the purchase is voluntary delisting to turn the company into a wholly-owned subsidiary.
In its tender offer filing, Lexicon explained the background for the delisting, stating, "To secure mid-to-long-term growth engines within the mobility industry, capital expenditures may occur, such as the large-scale expansion of operating assets and the upgrading of next-generation systems." It added, "If we remain listed, fluctuations in performance resulting from such investments and market evaluations could impact the stock price."
TPG currently holds a 61.17% stake in Lotte Rental through Lexicon, and it aims to secure the remaining 38.83% through this tender offer. The tender offer price is 59,000 won per share, which matches Lotte Rental’s initial public offering (IPO) price and the price at the time of the share purchase agreement. The payment date after the tender offer is scheduled for December 7.
On August 11, TPG signed a stock purchase agreement with Hotel Lotte and Busan Lotte Hotel to acquire 38.14% and 23.03% of Lotte Rental's shares, respectively, for a total of 1.3105 trillion won. As both sides closed the deal on October 30, Lotte Rental was officially brought under TPG's control.
Once TPG completes the tender offer, Lotte Rental will leave the stock market five years after its listing. Lotte Rental debuted on the KOSPI market on August 9, 2021. As the stock price fell shortly after listing and struggled to recover even to its IPO price, the tender offer comes as good news for investors who participated in the subscription. In fact, following the news of the tender offer on the 6th, Lotte Rental's stock price rose by more than 10% compared to the previous day.
Lotte Rental has undergone three major ownership changes since its founding. The company started as Korea Telecom Promotion, a subsidiary of KT, in 1986 and launched its car rental business in 1989. In 2010, KT acquired Kumho Rent-a-Car and merged it with KT Rental (formerly Korea Telecom Promotion), changing the name to KT Kumho Rent-a-Car. However, as performance declined, KT sold it back to the Lotte Group in 2015, leading to the current name, Lotte Rental. The Lotte Group pursued the sale of Lotte Rental at the end of 2024 to dispose of non-core assets and secure liquidity, and after one failed attempt, it succeeded in selling to TPG.
Lotte Rental has been considered a key affiliate of the Lotte Group, generating annual operating profits of 200 billion to 300 billion won. Looking at the third-quarter results, the final scorecard before the sale, the company posted 775.4 billion won in revenue and 92.9 billion won in operating profit, up 2.3% and 4.4% year-on-year, respectively. Cumulative operating profit for the first three quarters was 261.2 billion won, a 12% increase from the same period last year (233.2 billion won). Including the fourth-quarter performance, the company is expected to post record-high profits.
Meanwhile, there is significant interest in what changes Lotte Rental will face after leaving Lotte Group for the first time in 11 years to join a foreign private equity firm. First, a change in management is expected now that the largest shareholder has changed. Lotte Rental held an extraordinary shareholders' meeting on the deal closing date of October 30 and newly appointed TPG-affiliated figures Yoon Shin-won and Jubeen Jamshed Irani as non-executive directors. Director Yoon is the head of TPG's Korea investment, and Director Irani is the head of TPG's Asia portfolio operations.
Lotte Rental had already replaced its CEO after signing the stock purchase agreement with TPG. Choi Jin-hwan, the former CEO of Lotte Rental, took office in March 2023 and had succeeded in securing a reappointment in 2025, but stepped down on August 31, seven months before his term was set to end. Following Choi's resignation, Lee Jang-seop, head of the planning division (executive director), took over as CEO. Although CEO Lee has not been in office for long, it is highly likely that new management will be installed along with a brand renewal, as is common when a controlling shareholder changes.
The shift in business direction is also drawing attention. Lotte Rental is focusing on reorganizing existing businesses, such as corporate and individual long-term rentals and short-term rentals for foreigners, with the goal of strengthening profitability. It is also expanding its overseas business. It has established subsidiaries in Vietnam, Thailand, the UAE, and Japan, implementing different strategies for each country. It is focusing on car rental and shuttle bus businesses in Southeast Asia, and used car exports in the UAE. At the end of June, it established a new subsidiary in Okinawa, Japan, and has been operating a short-term car rental business there since late July.
Some analysts suggest the company may engage in more active business operations, unlike the Lotte Group's stance. Joo Young-hoon, an analyst at NH Investment & Securities, noted, "The specific strategic direction after the change of the largest shareholder has not yet been disclosed," adding, "It is expected that the company will move away from its previous conservative debt-to-equity policy and expand its market share through aggressive business activities."
On the other hand, there are opinions that one should keep an eye on potential exit plans or changes in financial policies, as the parent company is a private equity firm. Indeed, TPG is the second-largest shareholder of Kakao Mobility and attempted to exit by listing the company, but faced conflict with Kakao after that failed. Chae Young-seo, a senior analyst at Korea Investors Service, analyzed, "There will likely be no major changes in the business foundation in the short term, but there is a possibility that business strategies and investment/financial policies will change," adding, "We need to monitor how the changes in investment recovery strategies and business plans affect the company’s operations and financial structure."