이 기사는 2020년 05월 26일 08:00 thebell 에 표출된 기사입니다.

South Korea’s Hana Financial Group has made a major bet on private equity firm Hahn & Co.’s H-Line Shipping.

Hahn & Co. is returning money and making interest distributions to existing investors in its H-Line Shipping to replace them with new limited partners, sources said on May 22. The Seoul-headquartered firm will form a new special purpose vehicle (SPV) which will reacquire 100 percent of H-Line Shipping.

The SPV will be created with equity contribution of approximately 1 trillion won ($804 million) and senior loans worth 750 billion won. The amount of loans increased by 170 billion won compared with the predecessor which carried 580 billion won in senior and mezzanine loans.

Hana Financial Group‘s subsidiary Hana Bank has led the 750 billion won loan financing. While NH Investment & Securities – Hahn & Co.’s longstanding partner – has provided part of the debt, Hana Bank has reportedly arranged most of the amount.

It was almost a year ago that Hahn & Co. started working on raising capital to replace investors in H-Line Shipping. Amid a tough fundraising environment Hana Financial Group’s partnership with Hahn & Co. appears to be a win-win for both parties as Hana Financial Group is seeking to strengthen its investment business, industry watchers said.

Significantly, Hana Financial Investment, another subsidiary of Hana Financial Group, has decided to underwrite 300 billion won of the SPV’s total equity contribution of 1 trillion won. Hana Bank has signed a letter of commitment to invest 100 billion won in Hana Financial Investment’s fund.

Hana Financial Group has cited H-Line Shipping’s ability to generate cash flow as a reason for its decision. But some market watchers are raising their eyebrows as having a significant exposure to one company could be risky for Hana Financial Group, especially considering that it is expected to raise capital mostly from its affiliates.

According to Industry watchers, H-Line Shipping’s financial performance and credit worthiness are reliable. “Long-term contracts with high-quality shippers will likely support H-Line Shipping’s financial performance,” a source said.

H-Line Shipping’s revenue declined 1 percent year-on-year to 719 billion won in 2019. But earnings before interest, taxation, depreciation and amortization (EBITDA), a metric often used as a proxy for cash flow, increased 14.7 percent to 303.7 billion in the same period.

With this recapitalization, H-Line Shipping saw its debt grow, leading to the rise in a net debt to EBITDA ratio from the range of five to six times to 7.65 times.

(Reporting by Hye-ran Kim)