Debt sale for ThyssenKrupp unit draws Korean investor interest

NH Investment & Securities will begin marketing securities backed by loans made on the ThyssenKrupp deal as early as September, industry sources said on August 11.

Private equity groups Advent and Cinven agreed in February to buy the elevator division of Germany’s ThyssenKrupp for 17.2 billion euros (24 trillion won) in what is Europe’s biggest buyout in a decade. NH Investment & Securities was the only South Korean investor which participated in the financing of the acquisition. The firm provided loans worth 300 billion won ($253 million), which it plans to resell to other domestic investors after the securitization.

The syndication process is already drawing strong interest from domestic asset owners such as pension funds and mutual aid associations. Many of them appear to be eager to seize an opportunity to take part in the mega-deal while also expecting a stable cash flow from the elevator business, industry watchers said.

“Acquisition financing for ThyssenKrupp elevator buyout is one of the most expected deals in the second half of the year,” said an official at one domestic asset owner. “We are considering the investment.”

“A more reliable credit assessment is available for acquisition financing for overseas deals and that is one reason more domestic investors are searching for investment opportunities in the overseas acquisition financing markets,” an official at another asset owner said.

There is plenty of liquidity in the domestic acquisition financing market. NH Investment & Securities is anticipating an annual return of 5% from the financing for the ThyssenKrupp deal, which could attract many large investors as the senior trench loan in the domestic acquisition financing market currently generates an annual return of less than 4%. But they could face more obstacles when conducting due diligence compared to domestic deals, industry watchers said. (Reporting by Hye-ran Kim)