Two of South Korea’s top three life insurers – Samsung and Kyobo – will buy $129 million debt backed by revenues of the Indiana Toll Road Concession Company (ITRCC), participating in a $300 million refinancing of Australian asset manager IFM Investors’ debt borrowed in 2015 to acquire the US transportation infrastructure.
According to the Maeil Business Newspaper on Oct. 23, Samsung Life Insurance Co. Ltd. will invest $100 million in the senior secured debt that is expected to deliver an annual return in the 4% range.
Kyobo Life Insurance Co. Ltd., the third largest life insurer in South Korea by assets, has invested $29 million in the debt through MetLife Investment Management.
A source with knowledge of the matter confirmed the report.
The debt refinancing comes a year after IFM Investors sold a 10% stake in ITRCC to California Public Employees’ Retirement System.
In 2015, IFM Investors bought ITRCC, a 251.5 km highway in the Indiana state, for $5.7 billion and won exclusive rights to collect toll revenues from road users.
“The biggest advantage of SOC assets such as toll roads is they are in steady demand,” Maeil quoted an unnamed investment banking source as saying. “It is a low-risk investment because it is not about equity, but investing in debt.”
The debt investment has nothing to do with the $500 million fund launched by Samsung Asset Management Co. Ltd. earlier this year. The fund is jointly managed by IFM Investors to invest in infrastructure-backed debt in developed countries.
But the relationship built between Samsung and IFM Investors for the South Korean fund might have helped the Australian asset manager with selling the US toll road-backed debt to Samsung Life, the source told the Korean Investors.
US infrastructure is increasingly sought after by South Korean insurance firms after local authorities loosened regulations on insurers’ cross-border infrastructure investment, amid heightened expectations the US government may privatize infrastructure assets to fund new infrastructure facilities.
By Daehun Kim
<Edited by Yeonhee Kim>