Seoul, South Korea – Lotte Group announced on February 28th that it will sign a definitive agreement to sell its rental business, Lotte Rental, to private equity firm Affinity Equity Partners (Affinity) on March 11th.

The transaction involves the sale of a 56.2% stake in Lotte Rental, held by Hotel Lotte and Busan Lotte Hotel, for a total of 1.6 trillion Korean won, approximately $1.2 billion.

In conjunction with the sale, Lotte Rental will also conduct a 212 billion Korean won ($158 million) third-party allocation share issuance to Careena Transportation Group, a special purpose company (SPC) with Affinity as a major investor. The funds raised from this issuance will be used to improve Lotte Rental's financial structure following the change in major shareholders.

Lotte Group stated that the decision to sell Lotte Rental was made as the rental business did not align with the group's core growth strategy. The group intends to focus its mobility sector efforts on electric vehicle charging and autonomous driving technologies, which are among its four key growth areas. The proceeds from the sale will be used to strengthen the financial stability of Hotel Lotte and Busan Lotte Hotel, and to enhance the competitiveness of their hotel operations.

This agreement follows two months of due diligence after Lotte and Affinity signed a binding memorandum of understanding (MOU) in December of last year.

Lotte Rental's corporate value was assessed to be a total of 2.8 trillion Korean won. And Lotte Rental will issue 7,261,877 new common shares at a price of 29,180 Korean won per share.

Affinity Equity Partners is a leading private equity firm in Asia Pacific with a strong track record of successful investments. The acquisition of Lotte Rental is expected to further strengthen Affinity's portfolio and expand its presence in the mobility sector.