Toss to acquire 60% of Tada to enter taxi mobility market Toss will buy new shares issued by VCNC, which operates Tada

Translated by Kim So-in 공개 2021-10-13 08:24:28

이 기사는 2021년 10월 13일 08:06 더벨 유료페이지에 표출된 기사입니다.

South Korea’s financial platform Toss will acquire Tada, a mobility startup operated by VCNC, in a bid to enter the country's competitive taxi mobility market.

The fintech company signed a memorandum of understanding with VCNC and its parent SOCAR to purchase a 60% stake in VCNC, investment banking sources said on Friday. Toss will buy new shares issued by VCNC.

SOCAR needs to improve Tada’s competitiveness ahead of its planned initial public offering (IPO) next year.

Tada became a sensation when it first introduced the ride-hailing service using 11-passenger vans in 2018. However, the company had to scrap its popular van-hailing service in April last year due to a new legislation backed by taxi drivers. The company’s capital has been impaired, recording a net loss of 11.2 billion won ($9.33 million) in 2020.

SOCAR has reduced its financial burden by selling management rights of Tada in the form of capital increase. It has removed a big obstacle to its IPO as its major subsidiary has gained a new growth engine while avoiding capital impairment.

Toss has attracted investors every year thanks to competitiveness of its mobile financial platform. Toss raised 460 billion won in June in a deal which valued the company at 8.2 trillion won.

Toss plans to use most of the proceeds for Toss Bank, which began full operations earlier this month, but the government’s regulatory policies are highly likely to limit its expandability. Financial authorities instructed the newly launched internet-only lender not to exceed 500 billion won in new loans by the end of the year. In addition, as the loan growth rate is limited to 6% from the previous year, the lender will be difficult to achieve unlimited growth.

Toss seems to be targeting the taxi mobility market as Toss Bank's growth potential is expected to be limited. Toss founder and Viva Republica CEO Lee Seung-gun said that he expects synergy from the collaboration with mobility service providers in a variety of financial services.

Industry watchers, however, widely expect the possible synergy is likely to be weak given that the payment amount is not large in the taxi mobility market.

The domestic taxi-hailing service market is dominated by Kakao Mobility and T Map Mobility. Kakao Mobility raised more than 1 trillion won from financial investors over the last five years and T Map Mobility raised 400 billion won this year. Tada will need to continuously receive investments to have an edge in the competitive market.

"Kakao Mobility has struggled to meet supply and demand for several years, and T Map Mobility is still trying,” said an industry source. “It won’t be easy for a latecomer to gain competitiveness.” (Reporting by Se-hun Jo)
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