Shinhan Investment Corp. will provide a $150 million senior loan to an energy company of Ares Management LP to finance its acquisition of a US midstream company in the oil and gas supply chain, betting on energy infrastructure assets as the US is ramping up crude oil production to record levels, a local newspaper reported.
The loan is the entire senior tranche of $400 million credit facilities arranged by Macquarie Capital for EIF Van Hook Equity Holdings LLC to buy the midstream assets, the Maeil Business Newspaper said on Dec. 18.
Ares Management owns 100% of EIF Van Hook Equity Holdings.
The unidentified energy company to be acquired holds assets in the shale oil fields of the Bakken formation in North Dakota, a major source of new oil production in the US, as well as in Eagle Ford, a big shale gas well in Texas. It also has various sales channels to US markets, it added.
The loan facility is the biggest overseas alternative investment for Shinhan, part of Shinhan Financial Group.
It sourced the debt financing deal in cooperation with JB Asset Management, a provincial financial services firm in South Korea and invests via a vehicle managed by JB Asset. It plans to resell the senior debt to other institutional investors.
In the acquisition, Houston-based Philips 66, a downstream operation spun off from ConocoPhillips, has participated as a strategic partner, and signed a procurement contract as a client.
It will also provide its own crude rails and Dakota Access Pipeline, an underground oil pipeline which begins in the Bakken formation in North Dakota and stretches to South Dakota and Iowa to Illinois.
“The fact that Phillips66 participated as a strategic partner and signed a procurement contract means that it can make a big contribution to the company’s asset management and asset growth in the future,” a Shinhan Investment source was quoted as saying by the newspaper.
Shinhan plans to increase exposure to energy infrastructure assets in North America.
“Thanks to the US shale revolution, the US will reinvigorate its manufacturing industry, taking advantage of cheap oil produced on its home land and emerge as the biggest crude oil exporter,” the Shinhan source added.
<Edited by Yeonhee Kim>
Photo: Getty Images Bank