KB Capital Launches Full-Scale Operations in Indonesia... Supports Local Subsidiary's Fundraising (Comprehensive)

Decision to Provide Payment Guarantee of Approximately 29.2 Billion Won

[Asia Economy Reporter Ki Ha-young] KB Capital has stepped up to support the expansion of operating funds for its Indonesian subsidiary. This is interpreted as a measure to actively expand business in Indonesia, where operations began last year despite the COVID-19 situation.

According to industry sources on the 18th, KB Capital recently held a board meeting and decided to provide a payment guarantee for its local Indonesian subsidiary, 'Sunindo Gukmin Best Finance.' The guarantee is approximately 29.2 billion KRW to expand the operating funds of the local subsidiary.

In February 2019, KB Capital signed a contract to acquire 85% of the shares of Sunindo Finance, a subsidiary of Sun Motor Group, an Indonesian automobile retail company. By investing a total of 12.2 billion KRW, KB Capital established the local subsidiary Sunindo Gukmin Best Finance and officially started operations in June last year. Utilizing the network of Sun Motor Group, which operates automobile retail, hotels, and real estate businesses throughout Indonesia, the company provides automobile financial services.

Accelerating Market Penetration in Indonesia Despite COVID-19 Impact

Despite the COVID-19 situation, KB Capital is actively targeting the Indonesian market by leveraging Sun Motor Group’s captive market. Indonesia is the largest automobile market in Southeast Asia, achieving stable economic growth of around 5% annually. It is regarded as a market with very high growth potential due to its population of approximately 270 million, ranking fourth worldwide, and a young demographic with an average age of 29. Additionally, cooperation with KB Financial affiliates operating in Indonesia, such as Bukopin Bank, KB Insurance, and KB Kookmin Card Corporation, is also anticipated. As the number of local clients increases, linked sales among affiliates are expected to be fully activated.

Previously, KB Capital entered Laos in the form of a joint venture and quickly brought the local subsidiary onto a normal track. 'KB Korao Leasing,' jointly established with KB Capital holding 51%, Kookmin Card 29%, and LVMC Holdings 20%, showed rapid growth by utilizing the captive market of the LVMC Group (formerly Korao Group). While most local subsidiaries take at least three years to turn profitable, KB Capital halved this period and succeeded in turning a profit just one and a half years after starting operations in February 2017. As of the third quarter of last year, KB Korao Leasing recorded a net profit of 3.3 billion KRW.

A KB Capital official said, "Leveraging the experience of early stabilization in the Laos market, we are striving to quickly stabilize the Indonesian subsidiary as well," adding, "In the future, we plan to gradually expand our business areas beyond automobile financial services to include consumer goods installment plans, motorcycle installment plans, and rental cars."

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