Affinity Equity Partners to acquire SK rent-a-car

[Courtesy of SK rent-a-car Co.]

Hong Kong-based private equity firm Affinity Equity Partners (Affinity) has been named the new owner of SK rent-a-car Co.

According to investment banking sources on Tuesday, SK networks Co. selected Affinity as the preferred negotiator for the SK rent-a-car sale and plans to sign a memorandum of understanding (MOU) soon.

The deal’s target is SK networks’ 100 percent stake in the rental car company and is believed to be part of a move to secure liquidity within the SK Group. Affinity is reported to have bid around 850 billion won ($609 million) for the acquisition.

SK rent-a-car ranks second in the South Korean car rental market after Lotte Rental Co. SK networks acquired a 42 percent stake in AJ Rent-A-Car for 300 billion won and integrated it with its existing rental car business, rebranding it as SK rent-a-car in 2020.

SK rent-a-car recorded sales of 1.4 trillion won and operating profit of 122 billion won as of 2023 that respectively saw increases of 12.5 percent and 28.3 percent compared to the previous year. It is considered a lucrative subsidiary that accounted for over half of its parent company’s annual operating profit of 237.3 billion won.

With the 800 billion won funds from the sale of SK rent-a-car, SK networks plans to reposition itself into an artificial intelligence (AI) investment company. SK networks Chief Executive Officer Lee Ho-jeong recently unveiled the company’s plan to “realize the vision as an AI company” by applying AI to existing businesses and introducing new AI products and services during the shareholders meeting in March 2024.

With En-core Co., a data company that it acquired for 88.4 billion won in 2023, as the pivot, SK networks is prepared to adopt AI in its existing businesses as well as its subsidiaries and partners. The company strengthened its AI capabilities by investing 25 billion won in Upstage Co., a startup developing large-scale language models (LLM), earlier in the year and its subsidiary SK magic Co. at the forefront of change, transitioning its core business from home appliance lease to AI-based elderly and pet assistance services in 2024.

Affinity has previously profited from Oriental Brewery Co. transactions, and this acquisition is the first investment by Partner Min Byung-chul since the departures of founder Park Young-taeg and Managing Partner Lee Chul-joo, as well as Sam Lee who oversaw Affinity‘s investments.