Shinhan Card will acquire a controlling stake in an Indonesian financial company as part of its expansion strategy into emerging markets, the credit card company said Thursday.
“We will sign a deal next week in Jakarta to buy a 50 percent stake plus a share in Swadharma Indotama Finance from Indonesia’s Salim Group for a bit more than 10 billion won ($8.4 million),” a Shinhan Card spokesman said.
Shinhan Card plans to hold a board meeting on Aug. 21 to approve the acquisition, with a signing ceremony scheduled on Aug. 26. It aims to launch a joint venture with a new name in Indonesia in November after receiving approval from financial authorities in the two countries in September, the company said.
Shinhan’s local venture partner will be the existing shareholders who own the remaining stake in Swadharma Indotama Finance, the spokesman explained.
The exact acquisition price will be decided at Shinhan Card’s board meeting next week, he said.
“The acquisition is aimed at maximizing synergies between Shinhan Card’s 30 years of credit card business know-how and Salim Group’s nationwide retail networks,” the statement said.
Salim Group’s businesses include telecommunications, automobiles, leasing, mining energy and foods. Salim Food is Indonesia’s largest food manufacturing company, it said.
On top of strengthening Swadharma Indotama Finance’s existing businesses, Shinhan Card will seek an approval in Indonesia to enter the local credit card market late next year, the spokesman said.
If everything goes as planned, Shinhan Card will be the first Korean credit card firm to sell its products and services to Indonesian customers. In fact, it is risky for a credit card company to begin business in foreign countries without accumulated customer data, it said.
“We will beef up our overseas operations by making a presence in Indonesia following our recent advance to Kazakhstan. Particularly, we will focus on the credit card business in Indonesia in coming years,” Shinhan Card Chief Executive and President Wi Sung-ho said in the statement.
In July, Shinhan Card opened its first overseas business entity, Shinhan Finance, in Almaty, Kazakhstan, initially to handle auto financing. It plans to sell small loans to individuals from September and introduce lease products from 2017, the spokesman said.
In Kazakhstan, only banks are allowed to get into the credit card business. So Shinhan Card has to acquire a local bank if it wants to jump into the local credit card market, he said.
Shinhan Card said it will continue to enter other emerging markets in Southeast Asia based on its experiences in Vietnam, Kazakhstan and Malaysia.
In the January-June period, Shinhan Card posted a net profit of 352 billion won, up 11 percent from 318 billion won a year earlier, according to a regulatory filing.