Hana Financial Investment Co. Ltd. has underwritten $75 million senior debts sold by a Swiss private asset manager to fund a US solar power plant acquisition, and plans to resell them to domestic insurers by offering an annual return of about 5%.
The debt financing is part of the $208 million senior notes which Capital Dynamics floated to fund its recent purchase of cash equity interests in the 250 MW Moapa Solar Project in Nevada from First Solar Inc. in a deal worth $1 billion, according to investment banking sources on April 9.
Allianz SE, a German financial services firm, will underwrite the remaining $133 million senior debts.
GE Energy Financial Services and an affiliate of the Goldman Sachs Group participated in the acquisition as minority tax equity investors, First Solar said in a press release on March 30, 2017.
The senior debts are secured by equity stakes in a holding company which owns the solar power plant located on the Moapa River Indian Reservation, north of Las Vegas.
The solar power plant was built and began generating electricity last December. It has a long-term power purchase agreement with Los Angeles Department of Water and Power to deliver solar energy for 25 years.
Hana Financial’s alternative investment team head Hyung-joo Jin said the senior debts would draw strong interest from insurers which need to extend asset durations before the IFRS 17, a new accounting standard for insurance companies, comes into force in 2021.
South Korea will cut capital reserve requirements by half for insurance firms’ overseas infrastructure assets from as early as June, a move expected to accelerate their investment into cross-border infrastructure in search of stable returns for an extended period.
Hana Financial, a unit of a leading South Korean banking group, has been pushing into US power plant financing and aircraft funding.
Last January Hana arranged $200 million debt financing for a US gas-fired power facility in Lackawanna County, Pennsylvania, becoming the first Korean firm to lead manage a certain tranche of financing as a whole.
The brokerage house also had provided $37.5 million syndicated loans to a US solar power plant late last year, which made it the first Korean brokerage firm to extend syndicated loans for a US power facility.
By Daehun Kim and Sanghun Oh
<Edited by Yeonhee Kim>