Hana Financial Group is looking to raise money for a private equity fund that will invest in H-Line Shipping, a portfolio company of buyout firm Hahn & Co.
Hana Financial Group – which is the holding company of 13 financial services businesses including Hana Bank and Hana Financial Investment – will soon begin to raise capital to purchase an equity interest in H-Line Shipping, sources said on June 4. It will likely target domestic institutional investors, with a goal to complete fundraising by September.
Hahn & Co bought Hanjin Shipping’s bulk-carrier business in 2014 to found H-Line Shipping, which was invested in by its first blind-pool fund Hahn & Co I. The buyout firm, in partnership with Hana Financial Group, is launching a 1 trillion won ($820 million) project fund that will acquire the entire stake in the shipping company from Hahn & Co I to provide an exit opportunity for existing limited partners.
About 300 billion won of the 1 trillion won will be raised by Hana Financial Group through an underwritten sell-down process. The company’s affiliates are expected to invest about 100 billion won, including a 70 billion won commitment from Hana Bank. The remaining 200 billion won will likely be raised from domestic asset owners such as pension funds and mutual aid associations.
Whether these asset owners will invest in H-Line Shipping depends on their views on the shipping industry. Many industry watchers are optimistic about the company’s prospects given its stable business model and ability to generate cash flow. H-Line Shipping recorded an operating income margin of nearly 25% every year.
The fact that Hana Financial Group, one of the country’s leading financial conglomerates, will act as a co-general partner for the fund could assure domestic institutional investors. H-Line Shipping’s status as a national shipping company and the possibility that it could benefit from the government’s policy efforts to support the shipping industry may also attract investors such as public pension funds.
Hahn & Co is expected to raise the remaining 700 billion won for the project fund from foreign investors or by using cash held by its third blind-pool fund. (Reporting by Hye-ran Kim)