[THE INVESTOR] Korea’s retail giant Shinsegae Group and Hong Kong-based private equity fund Affinity Equity Partners are close to establishing a new e-commerce unit by the year-end, according to industry sources on Aug. 28.
Shinsegae had signed a memorandum of understanding in February with a consortium led by Affinity Equity Partners to launch a new e-commerce unit this year. According to the MOU, the PEF agreed to invest 1 trillion won (US$901.22 million) to establish a new unit after merging the online divisions of Shinsegae Department Store and discount chain E-mart.
However, they had some trouble agreeing on the merger details. There was also speculation that the deal had been terminated, as there were no follow-up announcements for over seven months.
According to sources, the situation changed after Affinity Equity Partners Vice Chairman Lee Chuel-joo and Shinsegae Group Vice Chairman Chung Yong-jin, both Brown University alumni, held talks and managed to reach an agreement.
Moreover, in order to survive in the already saturated e-commerce market here, they agreed to differentiate the business by focusing on establishing a logistics center and infrastructure for delivering fresh groceries. Most of the investments are now expected to be used for establishing a logistics center in Hanam, Gyeonggi Province, where Shinsegae Group has purchased a 21,422 square-meter site for almost 1 trillion won.
By Song Seung-hyun (email@example.com)