This article was published on June 12, 2025, at 3:29 p.m. on the ChosunBiz MoneyMove site.
Affirma Capital, a domestic private equity fund (PEF) management company, is reviewing the exercise of a call option for Japan's duty-free company JTC. If Affirma Capital, currently the second-largest shareholder of JTC, exercises the call option, it can become the largest shareholder and secure management rights.
According to investment banking (IB) industry sources on the 12th, the exercise period for the call option agreement between Affirma Capital and JTC's largest shareholder is approaching in four months. Affirma Capital and the former CEO, Koo Cheol-mo, had previously signed an agreement to extend the exercise period of the call option, which was originally set to expire last year, until October 7.
Affirma Capital is in discussions regarding whether to acquire the equity of the former CEO. If Affirma Capital exercises the call option this time, its equity stake will expand from 30% to approximately 59%, while the former CEO's equity stake will fall from 40% to about 9.8%. The exercise price for the call option is 4,309 won, with the condition of acquiring 15,795,809 shares held by the former CEO for 68 billion won.
Affirma Capital invested about 50 billion won in JTC through a paid-in capital increase in December 2022, securing a 30% equity stake. As JTC faced severe management difficulties due to the fallout from COVID-19 and continuous operational losses, it received financial support from Affirma Capital.
JTC, a KOSDAQ-listed company, faced difficulties in attracting investment as it was designated as a management issue and was on the brink of bankruptcy. As a result, Affirma Capital secured the possibility of management rights by signing a call option agreement concerning the former CEO's equity. The exercise price for the call option has risen from 4,259 won to 4,292 won and is currently at 4,309 won.
Industry insiders expect Affirma Capital to exercise the call option because the stock price of JTC, which was around 3,000 won at the time of investment, has surged. Recently, it has been fluctuating in the high 4,000 won range, but it even peaked at 6,470 won on the 28th of last month.
As the influx of tourists from Japan increases, it has achieved its best results since its founding. As of February this year, it recorded sales of 308.6 billion won, operating profit of 47.5 billion won, and net profit of 77.2 billion won. This represents increases of 105.8%, 117.1%, and 277.6% respectively compared to the previous year. The operating profit margin and net profit margin reached all-time highs of 15.4% and 25%, respectively. Earnings before interest, taxes, depreciation, and amortization (EBITDA) are at approximately 59.7 billion won.
Recently, the exit of the former CEO and the appointment of Yamamoto Fumiya, chosen by Affirma Capital, to solely manage the company has also added weight to the possibility of exercising the call option. The company stated, "As the former CEO will continue to oversee operations as before, there will be no change in business operation methods."
The former CEO is expected to participate when Affirma Capital sells its equity to recoup funds. Affirma Capital and the former CEO included a drag-along clause in a new shareholder agreement while extending the call option exercise period last year. According to the contract, the effect of the drag-along will occur after Affirma Capital exercises the call option.
An industry source noted, "Currently, discussions are ongoing regarding whether to exercise the call option, but no decision has been made regarding exercising the call option or extending the period."