Mirae Asset to underwrite $300 mn debt on US shale oil project

  • 2019-02-13

Mirae Asset Daewoo Co. Ltd., the brokerage arm of a leading South Korean asset manager, will underwrite a $300 million debt on a US shale oil pipeline project, pushing further into the US oil sector with shale oil production hitting a record.

As a debt financing arranger for the EPIC Crude Oil Pipeline, Mirae Asset is participating in the $1 billion credit package via a special purpose company (SPC) launched by Ares Management LP, according to investment banking sources on Feb. 12.

Global banks, including Deutsche Bank, Barclays and ABN Amro, will take on the remaining $700 million senior tranche which is expected to yield close to 7% per annum.

California-based Ares is making a $1.3 billion equity investment in the 1,000 km pipeline under construction to move crude oil and natural gas liquids from the Permian Basin, the biggest oil field in the US, and the Eagle Ford Shale in Texas to the Port of Corpus Christi in the Gulf of Mexico.

In aggregate, the Ares-backed SPC will pump $1 billion loan and $1.3 billion equity capital into the project which is scheduled to be in full operation from next year.

Mirae plans to sell down the debt investment to affiliate Mirae Asset Life Insurance Co. Ltd. and other domestic institutional investors, offering an annual return in the 6% range.

The South Korean brokerage firm has been stepping up its push into the US shale oil industry, as a record-volume output of shale gas vaulted America to the position of the world’s biggest oil producer, ahead of Russia and Saudi Arabia.

Last year, it invested a total of $210 million in US shale gas pipeline and facilities through Ares Management, including the $162.5 million senior debt on an ethane cracker and natural gas liquid pipeline project in Texas. It had completed the resale to domestic institutional investors.

Additionally, it committed $100 million to an Ares-managed energy fund for equity investment in the fourth quarter of 2018.

Separately, Ares Management reportedly collected $150 million in a senior loan from Shinhan Investment Corp., a South Korean brokerage firm, to fund the acquisition of a US midstream company in 2018.

By Daehun Kim

daepun@hankyung.com

<Edited by Yeonhee Kim>

Photo: Getty Images Bank