KKR, Shinhan bolster ties
KKR Co-President Joseph Bae, left, and Shinhan Chairman Cho Yong-byoung. / Korea Times file
By Park Jae-hyuk
Kohlberg Kravis Roberts & Co. (KKR) and Shinhan Financial Group are reinforcing their partnership through collaborations in several major projects here and overseas, dispelling worries that their strategic relationship may fizzle out.
The Korean financial group said Sunday its global investment banking (GIB) desk in London provided 25 million pounds ($33 million) recently to Viridor, the United Kingdom's second-largest waste management company that KKR acquired for 4.2 billion pounds in March from Pennon Group.
Shinhan's GIB desk is the group-wide team comprised of employees from its banking, brokerage, insurer and leasing service units. The group organized its London GIB desk in January last year at its bank's branch there. It also runs GIB desks in New York, Hong Kong and Sydney.
Industry sources said that BNP Paribas and Credit Agricole, the co-underwriters for the lucrative deal of providing a syndicated loan to KKR's portfolio company, initially wanted bidders to skip on-site due diligence citing the COVID-19 pandemic.
Shinhan's London GIB desk, however, had to conduct due diligence to receive approval from its headquarters here for the deal. Sources said Shinhan employees were allowed to visit the waste management company's facilities, before the company decided to participate in the project, because of the close ties between Shinhan and KKR.
The Korean banking group and the U.S. private equity firm (PEF) have pursued cooperation in various fields since September 2018 when they signed a memorandum of understanding regarding a strategic partnership for global alternative investments.
In January, they jointly set up a $200 million tailor-made fund, as part of efforts to enhance Shinhan's capability in global alternative investments.
“Our latest deal in London was signed to participate in the 4 billion pounds syndicated loan provided to the company that manages domestic and industrial wastes and generates electricity by incinerating them,” a Shinhan Bank official said.
The deal also involved Hana Bank, which provided 22 million pounds.
This was Shinhan and Hana's second co-investment overseas, following Shinhan Financial Group Chairman Cho Yong-byoung and Hana Financial Group Chairman Kim Jung-tai's agreement in May to cooperate in seeking business opportunities overseas. Their first joint project was participation in a $1 billion (1.2 trillion won) syndicated loan arranged by the African Export-Import Bank in August.
In Korea, KKR and Shinhan are jointly making investments in the construction of Coupang's logistics center in Incheon.
According to Shinhan, its subsidiaries and Hanwha Investment & Securities are attracting project financing for Cougar In The Zoo PFV, a project financing vehicle they established for KKR's plan to build the logistics center.
In 2018, KKR bought 55,000 square meters of land from SK Incheon Petrochem for the project. Construction was briefly halted due to protests from Incheon residents, but it is now going smoothly.
Industry sources said KKR, the project's largest investor, had looked for institutional investors to finance construction.