이 기사는 2020년 03월 16일 08:00 thebell 에 표출된 기사입니다.

South Korea's AJ Group has started to restructure its portfolio after selling off its car rental business to SK Networks last year.

According to investment banking (IB) industry sources on March 11, AJ Group has recently announced its plan to sell its non-core assets and restructure unprofitable business units. It is said that the group has contacted advisory firms to explore possibilities of streamlining its affiliates.

In line with the movement, some affiliates of the group including AJ Sellcar are mentioned as potential targets among advisory firms. Market watchers view that the likelihood of the group to restructure its business portfolio is high as there hasn’t been a major alteration since its sale of AJ Rent-a-Car last year. Some advisory firms seek potential buyers to be hired as a lead sale manager.

“AJ Group has been mulling over the plan to sell off its auto-related businesses, except for rental and new mobility, that don’t generate strong synergies after its sale of AJ Rent-a-Car,” said an IB industry source, adding, “Considering the group has separated AJ Park as an independent business unit, it is likely that its auto and service business unit will go through a major transformation.”

The group’s auto and service business unit which includes AJ Sellcar has generated synergies until the group sold AJ Rent-a-Car. IB industry watchers see that AJ Sellcar’s sales to have considerably decreased after the sale of AJ Rent-a-car. AJ Rent-a-Car contributed around three billion won to AJ Sellcar’s annual sales, but the amount may have been bigger considering the car rental company sold financial products for long-term car rental service.

AJ Sellcar’s low profitability also seems to be a concern for AJ Group. AJ Sellcar’s sales, which was 117.5 billion won in 2015, more than halved in 2017 to 41.1 billion won. AJ Sellcar posted an operating profit for the first time in 2018 (700 million won) ever since the company has started to disclose separate financial statements in 2014.

“While AJ Group has announced its plan to restructure its business portfolio, AJ Sellcar is most likely to be put up for sale among its affiliates,” said an IB industry source.

In case the group actually puts its affiliates including AJ Sellcar up for sale, market watchers are likely to pay attention to the use of the proceeds. Last year, AJ Networks secured 278.7 billion won from the sale of AJ Rent-a-Car and 29.9 billion won from a sale of idle real estates.

In the meanwhile, the amount of cash the company has spent is less than 100 billion won. AJ Networks spent 14.5 billion won for the AJM’s right issue, 22.5 billion won for its U.S. corporate body’s capital increase, 25 billion won for the acquisition of Ho Chicken and 25 billion won for participating in the Modu Rental acquisition. Once the group sells some of its affiliates and secures additional cash, the focus of its business restructuring is expected to shift to executing mergers and acquisitions (M&A) transactions in a bid to enter a new market.

(By reporter Choi Ik-hwan)