Fitch Ratings has affirmed Lotte Rental's (089860.KS) credit rating at "BBB-" with a stable outlook, saying the change of its largest shareholder to U.S. private equity firm TPG will have a limited short-term impact. The agency said it would continue to monitor the company, however, as it did not rule out changes to Lotte Rental's business and financial strategy over the longer term.
Fitch said on the 13th that it was keeping Lotte Rental's rating unchanged at "BBB-, Stable." The agency assessed that Lotte Rental's global credit profile would remain steady for the time being even if TPG acquires the combined 61.17% stake held by Hotel Lotte and Busan Lotte Hotel. The acquisition would not affect Lotte Rental's rating in the short term, Fitch said.
Over the longer term, however, the agency said it would not rule out the possibility of changes to Lotte Rental's business or financial strategy under a new controlling shareholder. While a scenario of shareholder support remains, Fitch said it could take time before meaningful strategic synergies and integration materialize.
The acquisition still requires regulatory approval to be completed, but Fitch said the Fair Trade Commission was unlikely to object. When Affinity sought to acquire Lotte Rental in 2024, it already owned SK Rent-a-Car, the agency noted, raising concerns that control of two car rental companies could weaken market competition. TPG, by contrast, does not own a competing car rental business in South Korea, making approval more likely, Fitch said.
The 61.17% stake TPG is buying is priced at 59,000 won per share, putting the total deal at about 1.31 trillion won ($944 million). The entire enterprise value is about 2.1 trillion won ($1.51 billion). The deal is seen as a win-win: the Lotte Group can use the proceeds, running into the trillions of won, to improve its financial structure, while TPG gains a foothold to enter South Korea's car rental market.
