Korean brokerages provide $115 mn financing backed by rolling stock in Spain

  • 2018-09-12

Hana Financial Investment Co. Ltd. and NH Investment & Securities Co. Ltd. have extended 99 million euros ($115 million) in a three-year loan to fund a transaction to buy about 1,300 units of rolling stock run by Spain’s metro transport operator, Metro de Madrid.

An unidentified Spanish infrastructure management firm recently originated the loan to acquire a 57% stake in a joint venture company formed and owned by local banks, according to investment banking sources on Sept. 11.

The venture owns 2,280 units of rolling stock and leases them to Metro de Madrid. It sold the 57% stake in itself to the Spanish company for the banks to exit part of investments.

The financing, first reported by the Seoul Economic Daily earlier this week, is expected to yield a 6% annual return.

It marked the first investment by a South Korean institutional investor in an infrastructure asset in Spain and was sourced by Hana Financial.

Hana underwrote the loan together with NH Investment through a special asset account run by Eugene Investment & Securities Co. Ltd. They will sell it down to domestic insurance companies and pension funds. Most of the rolling stock was built between 2006 and 2009.

European countries have started leasing infrastructure facilities since the late 2000s to improve public finances. Metro de Madrid has leased new trains and bought them at the expiration date at lower prices.

“It carries very low risk because its return comes from dividend income based on the subway fares for Metro de Madrid,” a Hana Financial source told the Korean Investors.

The borrowing company can refinance the loan as early as six months before the expiration date.

By Daehun Kim

daepun@hankyung.com

<Edited by Yeonhee Kim>

Photo: Getty Images Bank