Fintrax and Lotte form JV to boost tax-free shopping in Korea

Eurazeo Capital portfolio company Fintrax Group has formed a joint-venture (JV) with The Lotte Group subsidiary Lotte Data Communications Corporation (LDCC).

Fintrax will join Lotte as shareholding partners in CubeRefund, an existing refund operator in Korea and will drive the business forward together.

Fintrax Group is the second largest tax-free operator in the world with over 150,000 retail outlets including leading luxury and retail brands such as Dior, Gucci, Dolce and Gabbana. The JV will firmly establish CubeRefund, which will use the Fintrax Group’s tax-free subsidiary Premier Tax Free’s name and logo, as the leading VAT refund company in Korea.

The JV project will contribute to the expansion of Lotte Group’s sales as well as the economy by increasing visits to overseas tourists through duty-free shops, department stores, and outlets in the mid to long-term.

CubeRefund is recognised for its innovative technology, which aligns with Fintrax Group values. Through this agreement, CubeRefund (t/a Premier Tax Free) will provide high-quality tax refund services to foreign tourists visiting Korea. In addition, the company plans to become more active in expanding its business by promoting international joint marketing, increasing the luxury goods tax refund business, and establishing a bridgehead for overseas market entry.

Fintrax CEO Patrick Waldron commented: “We are delighted to invest in this joint venture with CubeRefund. We have a great partner in the Lotte group, who is one of Asia’s leading companies. This latest investment underpins our commitment to Asia as a growth strategy for our Group.”

Waldron will be joined on the board of the JV operation by Gary Byrne, head of New Markets at Fintrax, who leads the Asian strategy and led the deal on behalf of Fintrax. Byrne added, “We are pleased to begin our operations in Korea, this is increasingly an important market for our international brands.”

“CubeRefund is the first successful case to attract foreign investment as an excellent venture company discovered by LDCC,” said LDCC CEO Yong-deuk. “We will continue to explore various win-wins. I will take the lead in spreading the culture of mutual growth.”

The tax refund market in Korea has grown almost 10 times since 2010 from circa W41.7bn to  circa W413bn in 2017 and is expected to grow in the future in line with the continued growth of overseas tourists. Tax-free shopping is a fundamental part of the country’s Government strategy to attract Chinese and other international tourists.

Fintrax were advised by Natixis and LDCC were Advised by PWC Korea.