Korean brokerages invest in Heathrow’s new runway project

  • 2019-08-29

Mirae Asset Daewoo Co. Ltd. and Korea Investment & Securities Co. Ltd. have provided a combined $434 million debt on the construction of Heathrow Airport’s third runway, while Samsung Securities Co. Ltd. is seeking to participate in the financing package for the 14-billion-pound ($17 billion) project.

Mirae Asset Daewoo has recently agreed to underwrite 200 million pounds ($244 million) in a 15-year loan on the construction project with Heathrow Airport Holdings Ltd., the operator of the London airport, according to investment banking sources this month.

It provided the funding through Hanwha Asset Management Co. Ltd.

Mirae Asset sold the debt investment down to domestic institutional investors just within a month, offering annual returns of about 5%, including currency hedging premiums.

Earlier this year, Korea Investment & Securities Co. Ltd. provided a mezzanine funding of 230 billion won ($190 million) with a 12-year term for the project.

The brokerage house resold it for a target return of between 4.5 and 5% per year.

Korea Investment underwrote the mezzanine debt via South Korea-based Platform Partners Asset Management Co. Ltd. and BNP Paribas Asset Management.

Separately, Samsung Securities is in discussion to provide hundreds of million dollars in a loan to the Heathrow airport project which is scheduled for completion in 2026.

Continuous growth in air passenger and cargo traffic as a result of affordable flight rates fueled interest in the new runway construction of Heathrow, despite worries about its aggressive expansion plan.

EQUITY INVESTMENT

In June, Hanwha Investment & Securities Co. Ltd. and NH Investment & Securities Co. Ltd. acquired a combined 2.85% stake in London’s Gatwick Airport for around 280 billion won ($243 million) from a consortium led by the US-based Global Infrastructure Partners (GIP).

They sold it down to domestic insurers and pension funds in less than two months.

In the US, South Korea’s STIC Alternative committed $51 million to Carlyle’s blind-pool infrastructure fund to finance the redevelopment and expansion of John F. Kennedy Airport’s Terminal One. It is reselling the investment to domestic institutional investors.

Terminal One is home to 23 international airlines, including Air France, Lufthansa, Korean Air and Japan Airlines.

Carlyle Group is a financial partner for the project, one of the largest public-private partnership projects in the US.

The construction is expected to begin in early 2020 and finish during the second half of 2025.

By Hyun-il Lee

hiuneal@hankyung.com

<Edited by Yeonhee Kim>

(Photo: Getty Images Bank)