Korea's Ivy Financial raises $22.5 billion secured by PEF equity

Korea's first PEF equity securitization led by Kiwoom Securities

 

Korea's Ivy Financial (formerly AJU Autolith) has raised KRW 22.5 billion secured by private equity (PEF) stakes. This is the first time a company has raised funds through a securitization process using PEF stakes as collateral.

According to the securities industry on April 4, Aviva Finance Korea borrowed KRW 22.5 billion with a one-year maturity from a special purpose company (SPC), Icheon-gu Ivy Partners Seventh Limited. The SPC issued asset-backed commercial paper (ABCP) with the same one-year maturity as the loan on March 3 to fund the loan. The securitization process was led by Kiwoom Securities

In the process of issuing the ABCP, Korea Ivy Financial trusted the equity securities of SHCF PEF (acquisition cost of KRW 22.5 billion) to SC First Bank and designated SPC as the primary beneficiary. The equity securities trust is a type of collateral for the loan. Therefore, the actual underlying asset of the securitization is the PEF equity.

"This is the first case of PEF equity securitization in which PEF equity is used as collateral but is the actual underlying asset," said Kim In-seok, Head of Securities at Kiwoom Securities.

SHCF PEF is a private equity fund raised by secondary financial institutions such as credit institutions, with Luther Associates Korea as the general partner and Korea Ivy Financial as the limited partner.

SHCF PEF is investing the majority of its capital in convertible bonds issued by A&P Financial (formerly Rush N Cash). The convertible bonds pay interest at 9% per annum before the promised listing date and 15% per annum if the company is not listed.

Kium Securities gained attention in February this year when it securitized stock-backed loans into ABCPs, and in 2007, it led the securitization of hybrid capital securities issued by a small and medium-sized bank. "We will try to find new areas of securitization that are not known in the structured finance market," Kim said, adding, "We will build a first record in the securitization sector."

 

MoneyToday | Eunjae Hwang

http://news.mt.co.kr/view/mtview.php?no=2009080514466078048&type=2&HEV1