Galway-headquartered financial services company Fintrax has agreed a joint venture with South Korean conglomerate the Lotte Group to tap into the country's booming tax refund market, which has grown tenfold since 2010.
Founded in 1985, Fintrax is one of the world’s biggest players in processing tourist VAT refunds. The parent company of Premier Tax Free, it also provides multicurrency conversion solutions.
Chief executive Patrick Waldron told The Irish Times that the firm, which has doubled in size to over 800 employees worldwide over the last four years, is aiming to become the biggest provider of tax refund services in South Korea through the new venture.
“We are dependent on tourism and luxury goods, and the biggest growth in this is in Asia. We’ve been in Singapore for the last 10 years, but are now targeting South Korea due in part to its proximity to China and Japan. There was a 30 per cent increase in tourists to 15 million there last year, and about 8 million of these were Chinese, who are big buyers of luxury goods,” said Mr Waldron.
“South Korea is a reasonably well-established market with six major competitors, but through the Lotte Group we should get about 15 to 20 per cent of the market in a year and should be the biggest company in the space in about three years.”
Fintrax, which operates in 34 markets worldwide, serves 14,000 retail merchants in over 150,000 stores. In Ireland it is in 5,750 outlets including Brown Thomas, Arnotts and Weirs.
The company, whose largest shareholder Eurazeo invested €550 million in 2015 for a 90 per cent stake, said it is expecting revenues of up to €260 million in 2017, up from €225 million the previous year.
“We have doubled headcount from 400 to 800 over the last few years, and expect to take on more staff in areas like finance and IT, particularly in Ireland,” said Mr Waldron.
“There are a number of possible small acquisitions we’re looking at but we are still growing rapidly as it is with about 20 per cent compound growth over the last nine years. At an ebitda level we’ve tripled profits in the last four years, and our challenge is to double that over the next few years,” said Mr Waldron.
“Having Eurazeo on board has been great because they have about €7 billion in investments, and at any one time have about €1 billion spare to help with acquisitions. They also have offices in a number of countries we are targeting,” he added.
In addition to the move into South Korea, Fintrax has recently expanded into a number of central and eastern European countries. While it is primarily focusing on growth in Asia, the company is looking at other territories.
“We’ve established partnerships in six countries in Latin America, but haven’t started operating there yet, and the Middle East is another big market. The Gulf Co-operation Council is bringing in VAT at about 5 per cent at the beginning of 2018, and this will be followed by a tourism scheme so we are looking to establish a presence there soon. Russia is also somewhere we’re keen to gain ground in as well.”