Monday, August 2, 2004
GE Capital to buy stake in Hyundai
REUTERS
SEOUL: GE Capital, a unit of General Electric Capital has agreed to buy a stake in Hyundai Motor's ailing financial arm for $371 million, making inroads into South Korea's $8.6 billion auto financing market.
Hyundai Capital Services, 84 per cent owned by top South Korean car maker Hyundai Motor, said the US company would invest a total of 1 trillion won ($859 million) in the auto finance and lease firm by 2006.
The investment into Hyundai Capital cuts Hyundai Motor's exposure to the unit, which suffered a net loss of 187.3 billion won last year. It also helps bolster Hyundai Capital's financial structure and bring in financial expertise.
Hyundai Capital said in a statement GE Capital would pay 432 billion won for a 38 per cent stake, or 16,000 won per share, with an option to buy an additional 5 per cent in 2006.
"By attracting a sizable foreign investment through this alliance, we will be able to raise out global credibility, lower borrowing rates and become a global financing company," the statement said.
Eyeing a presence in the growing auto finance and lease market, GMAC, a financial unit of General Motors, and unlisted Samsung Card have agreed to set up a joint venture with 20 billion won in capital.
As well as the auto-finance arm, Hyundai has a credit card firm.
Shares in Hyundai Motor were down 0.35 per cent at 43,250 won at 0229 GMT, while the broader market was 1.57 per cent lower.
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