Mirae Asset Daewoo Co. Ltd. has sealed a $450 million financing deal to buy three Boeing 777-300ER aircraft leased by China Airlines, as the South Korean brokerage firm aims to accelerate its push into the aviation financing market by taking a stake in Asiana Airlines Inc.
The $450 million funding was raised from Korean institutions, including $162 million of mezzanine and equity tranches which Mirae Asset sold down to two unidentified Korean institutional investors, according to sources with knowledge of the matter on Dec. 11.
It was first reported by domestic news outlet Financial News on Dec. 10.
The senior debt of $288 million was provided by a pool of Korean banks, including Kookmin, Shinhan, Woori, IBK and NongHyup.
The equity portion’s target IRR is 15%, while the target returns for other tranches were not immediately available.
The three aircraft were owned by ICBC Leasing and GE Capital Aviation Services on lease agreement with China Airlines.
One of the planes has been recently delivered to the Taiwan’s national carrier, with the lease back of two other aircraft pending.
EYES ON ASIANA’S $3.6 BN AIRCRAFT LEASE
Mirea Asset entered the aviation financing market in 2014.
Its recent bid for a stake in Asiana Airlines, South Korea’s No. 2 carrier, underscored its ambition to boost aviation financing business, which may include the purchase of an aircraft leasing company, the Seoul Economic Daily reported last week.
If the deal go through, Mirae Asset may be able to secure $3.6 billion worth of finance and operating lease of Asiana Airlines which has relied on foreign leasing companies.
Asiana Airlines operates 83 planes through operating and finance lease of 4.3 trillion ($3.6 billion) as of the end of September 2019, according to the daily. For the operating lease of 3 trillion won, it pays nearly 7% of interest rates.
In May this year, Mirae Asset earned more than 15% IRR by selling two 777-300ERs to a Japanese leasing company for an undisclosed sum, the Financial News added. It bought the aircraft leased by Emirates Airline in 2015 and leased them back to the airline.
By Hyun-il Lee
<Edited by Yeonhee Kim>
(Photo: Getty Images Bank)