Toss to Seek Investors for 400 Billion KRW Acquisition Financing of LG PG Business Division

IM Sent to Institutional Investors Led by Samsung Securities
Viva Republica 100 Billion Equity Investment
CPS 100 Billion · Acquisition Financing 200 Billion

[Image source=Yonhap News]

[Asia Economy Reporter Lim Jeong-su] Viva Republica, the operator of the mobile financial service 'Toss,' has begun recruiting investors for acquisition financing to acquire 'Toss Payments' (tentative name). Toss Payments is a newly established corporation created by LG Uplus through the spin-off of its electronic payment (PG) business division. Due to the COVID-19 pandemic, due diligence and acquisition financing were delayed, but recently, the equity acquisition process has resumed in earnest.

According to the investment banking (IB) industry on the 23rd, Viva Republica is promoting the attraction of investment funds to acquire shares of Toss Payments, with Samsung Securities as the lead manager. The recruitment scale is about 400 billion KRW, divided into senior acquisition financing, mezzanine convertible preferred stock (CPS), and subordinated equity investors to attract institutional investors.

Viva Republica has decided to invest about 100 billion KRW in equity. Other institutional investors will participate as financial investors (FI) and acquire about 100 billion KRW worth of CPS. CPS is a security that pays a certain level of dividends and can be converted into shares. The remaining 200 billion KRW will be raised through debt-type acquisition financing.

Viva Republica plans to acquire shares of Toss Payments in August using funds raised through acquisition financing and to start full-scale operations from September. The initial plan was to complete the equity acquisition in June, but the acquisition process was postponed by about two months due to COVID-19 and other factors.

The investor recruitment is reportedly proceeding relatively smoothly. According to the IB industry, many institutional investors such as some pension funds, mutual aid associations, and capital companies are considering participation. An industry insider said, "LG Uplus PG business division has consistently demonstrated stable cash-generating ability," adding, "With the synergy effect with Toss, the corporate value is expected to increase, so the investor recruitment is likely to be completed without major difficulties."

Viva Republica signed a stock purchase agreement (SPA) for Toss Payments last year. The plan is to expand consumer payment touchpoints and provide innovative payment services based on Toss, a mobile payment service, and about 80,000 LG Uplus affiliated stores.

PG operators mainly provide payment services between merchants such as online (including mobile) shopping malls and financial companies such as card companies and banks. The domestic PG market is oligopolized by the top three companies?KG Inicis, LG Uplus, and NHN Korea Cyber Payment?with a market share of 60-70%. LG Uplus PG business division holds about a 20% market share, maintaining a stable revenue base.

However, the recent Toss fraudulent payment incident is expected to be a constraint on investor recruitment. Recently, an incident occurred where money was paid without user consent, raising security stability issues and causing subscriber churn. An industry insider said, "Toss, as a large-scale payment operator, may face issues regarding the suitability of its major shareholder," and "This related uncertainty is expected to act as a negative factor in investor recruitment."

This content was produced with the assistance of AI translation services.