South Korea’s Hana Financial Investment Co. is recruiting local institutional investors to join it to invest in what would be the country’s biggest bet on a power plant in the United States.
According to the investment bank industry on Thursday, Hana Financial Investment has been collecting $470 million worth funds from Korean institutional investors including NH Nonghyup Bank and NH-Amundi Asset Management to invest in Mattawoman Project that will build a natural gas-fired combined-cycle plant in Maryland, the U.S. at a cost of $1.16 billion.
Hana Financial Investment won the position of the fund’s lead manager from Panda Power Funds, an American infrastructure developer that has been leading the project. The Korean investment firm is seeking for additional funding sources to complete the investment process by October, which would be the largest amount for domestic investors to invest in a U.S. power plant.
Mattawoman Energy Center aims to kick off its commercial operation by the first quarter of 2020 to supply energy in Maryland with the largest demand for electricity in the country and to sell power to Northeast America, the country’s biggest power market.
Investment in the energy center is expected to generate stable returns as it plans to supply its energy to companies with high credit ratings and it has already agreed to guarantee minimum revenue.
NH Nonghyup Bank will arrange $120 million senior debt financing for the fund, which is expected to generate an annual return of about 5 percent. Junior debts with expected yields in the 8 percent range will be arranged by Hana Financial Investment and other institutional investors including domestic pension and fund services and insurers. The fund will be composed of $275 million senior debts, $175 million subordinate debts and $20 million equity investment. NH-Amundi Asset Management will arrange the equity investment.
By Chun Gyung-woon and Song Gwang-sup
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