A promotional image of Tada's premium taxi service Tada Plus (VCNC)
South Korean financial technology unicorn Viva Republica said Friday it has signed a deal to acquire a controlling 60 percent stake in mobility firm VCNC, known for premium ride-hailing app Tada, in its new rights offering.
Viva Republica, which offers various financial services under its flagship Toss brand, said the takeover is aimed at expanding its financial services business and overhauling Tada’s embattled mobility service by the end of this year, the company said in a statement.
The deal will also allow drivers and users to benefit from wider choices in the domestic ride-hailing service market, and at the same time spur VCNC‘s growth with the proceeds.
Viva Republica, VCNC and its parent ride-sharing firm Socar have signed a memorandum of understanding regarding the acquisition, which is scheduled to close as early as this month. The transaction price was not disclosed.
The move is in line with Viva Republica’s history of disrupting protected markets and competing with those in dominant positions, its founder and Chief Executive Officer Lee Seung-gun said.
Viva Republica began its journey with the money transfer app Toss in 2015, and later jumped into new realms of businesses, establishing a payment gateway, a securities brokerage and, most recently, an online-only lender earlier in the week.
The fintech firm was valued at 8.2 trillion won ($6.9 billion) with the latest fundraising round of 460 billion won in June led by the Korea Development Bank and Alkeon Capital Management.
“Given that Korea‘s taxi-hailing market is generating about 12 trillion won of revenue annually, and half of the orders for taxi rides stem from ride-hailing apps, we see a potential for a synergy with our various financial services including mobile payment,” Lee said in a statement.
The news comes after VCNC was forced to scale down its premium ride-hailing service in 2020, following a rapid expansion in the market since 2018.
Its flagship van-hailing service came to an end with the revision of the Passenger Transport Service Act passing through the parliament in March 2020. The revision came into effect in April this year.
Over the course of time, VCNC’s capital has been impaired, with its liabilities of 6.8 billion won outpacing its assets of 4.8 billion won as of end-2020. The company recorded a net loss of 11.2 billion won in 2020, according to a disclosure submitted to financial authorities.
VCNC has been a fully owned subsidiary of Socar since 2018.
Following the takeover deal, Lee Jung-haeng, former chief technology officer of VCNC, will remain at VCNC's CEO post he took in August.