Mirae Asset Daewoo Co. Ltd. and seven institutional investors in South Korea will provide a senior loan of 600 million euros ($672 million) to Goldman Sachs’ credit fund which manages $13 billion for lending to blue-chip companies in North America and Europe.
Shinhan Alternative Investment Management Inc. has recently closed a domestic fund for the capital call loan facility, targeting returns of around 4.5% per year, according to investment banking sources on May 7.
The target returns for the euro-denominated loan include currency hedging premiums.
Of the 600-million-euro loan, Mirae Asset will put up 98 million euros for resale to domestic institutional investors.
“Because of lower capital requirements for investing in the Goldman Sachs fund with a high credit rating, insurance companies piled into the fund,” one of the sources told the Korean Investors.
The Goldman Sachs fund received a double-A-minus credit rating from a global ratings agency. Its investments include debts of Italian payments service firm Nexi and specialty chemical distributor Azelis.
Decent returns and low default risk has been driving growth of the fund financing market in recent years, despite concerns that easy borrowing is being used to boost returns of the funds.
Last year, South Korean institutional investors committed $650 million to a loan facility for Goldman Sachs’ real estate debt fund, Broad Street Real Estate Credit Partners (RECP) III, via Shinhan Alternative Investment.
By Hyunil Lee and Jung-hwan Hwang
<Edited by Yeonhee Kim>
(Photo: Getty Images Bank)