Korea Investment & Securities Co. Ltd. committed $130 million to a subordinated debt on a portfolio of 190 gas stations in the US Midwest last week, in the first foray into the US downstream oil sector by a domestic financial services firm, according to a media report.
The debt was part of the $300 million financing raised for the portfolio deal by a joint venture of British oil company BP plc and an energy-focused private equity firm, CNews, a local news provider for the construction industry, said on Sept. 3.
The venture bought the full ownership of the 190 gas stations for an undisclosed sum.
Korea Investment expects to earn 7-9% in annual returns from the debt with a four-year term.
An unidentified British infrastructure fund separately invested $30 million in the financing package.
BP owns 37% of the venture, and the private equity house holds the remaining 63%.
To expand their downstream business, the JV plans to spend 200 billion won ($167 million) in building 30 additional gas stations within the next two years.
In the process, BP will increase its holding in the venture, the report added.
The debt investment is meaningful in that a Korean financial services company made a foray into downstream infrastructure assets which had been hardly accessible for Korean investors.
US shale oil production growth and a diversification of sales channels led to creating the downstream investment opportunity for Korean capital, the report said.
Korea Investment plans to sell down only 35% of the acquired debt, or 45 billion won, to domestic institutional investors.
<Edited by Yeonhee Kim>
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