'Socar's First Overseas Car-Sharing Project' Moving Toward an Orderly Wind-Down in Malaysia

Socar Malaysia Announces Service Termination on August 31
SK Buys Out FI Shares Using Recent CB Proceeds
Subsidiary in Capital Impairment… SK’s Ownership Now at 93.74%

It appears that SK is moving forward with the orderly wind-down of "Socar Mobility Malaysia," which had been part of its expansion into the Southeast Asian mobility market. The company was unable to achieve profitability and plans to end its local service at the end of August.

Socar Mobility Malaysia Service Termination Notice Email / Photo by Reader Provided

According to the investment banking (IB) industry on August 20, Socar Mobility Malaysia recently sent an email notification to its users stating that service will be terminated starting from August 31. The notice from Socar Malaysia specified, "Socar’s sharing service will be discontinued in Malaysia," clearly stating both the termination date and the deadline for refunds of Socar account balances.

However, the company also announced that the services of Trevo, a subsidiary of Socar Mobility Malaysia, will continue. Trevo is a peer-to-peer (P2P) car rental platform operating in Malaysia. Socar Malaysia has informed users that they will be able to receive refunds for any remaining balances in their Socar wallet accounts starting September 1, or transfer them to a Trevo wallet account.

In 2017, SK established the Malaysian joint venture "Socar Mobility Malaysia" together with Korean company Socar, and held its local corporate launch event in Malaysia in January 2018, subsequently starting full-scale operations. This marked the first global entry for the Korean-style car-sharing model, drawing attention from financial investors (FIs) and attracting investment.

Recently, SK appears to be seeking to wind down the Socar Malaysia entity, in which the company is the majority shareholder. As of December last year, Socar Malaysia’s revenue was KRW 15.212 billion, with a net loss of KRW 6.343 billion. As of last year, the company’s paid-in capital stood at KRW 107.132 billion, while total equity was negative, at KRW -60.129 billion, indicating capital impairment. SK has not disclosed the book value of this subsidiary in its filings.

On August 3, SK announced via the Financial Supervisory Service’s electronic disclosure system that it would issue convertible bonds (CBs) worth KRW 5.8 billion and KRW 2.9 billion to private equity fund operators EastBridge Partners and Eugene Private Equity (PE), respectively. This is interpreted as SK’s move to use the proceeds from the CBs to buy back Socar Malaysia shares held by the FIs, thereby supporting the FIs’ exit from their investment.

At the time of establishment, SK and Socar each held a 60:40 equity split, but through subsequent share sales by Socar and share buybacks by SK, SK’s stake has increased to 93.74% as of the first half of this year. Socar gradually reduced its stake by selling shares, and on August 7, the Board of Directors Operating Committee resolved to sell its remaining shares in full.

When asked whether it was considering selling the subsidiary, an SK official replied, “All assets are subject to rebalancing, and we are reviewing various options, but nothing has been decided yet.”

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