Samsung C&T Raises 300 Billion KRW Using Samsung Electronics Construction Accounts Receivable

Securitization of Construction Payments for Multiple Group Affiliates Including Pyeongtaek Semiconductor Plant
Likely to Continue as a Short-Term Funding Method

Samsung C&T, the holding company of Samsung Group, has securitized construction accounts receivable from group affiliates such as Samsung Electronics and Samsung Display to raise 300 billion KRW in funds. This means they have converted the construction fees to be received from affiliates into cash in advance. Samsung C&T, which has secured orders for construction projects worth trillions of KRW from affiliates including the Samsung Electronics Pyeongtaek semiconductor plant and is carrying out the construction, frequently uses construction accounts receivable securitization as a means of financing.

According to the investment banking (IB) industry, Samsung C&T recently issued 300 billion KRW worth of construction accounts receivable securitized bonds with Yuanta Securities as the lead underwriter. The group’s construction payments receivable are transferred to a special purpose company (SPC) established by Yuanta Securities, and the SPC issues securitized bonds using these receivables as underlying assets (a type of collateral).

The exterior view of Samsung Electronics Pyeongtaek Line 2 factory, the world's largest semiconductor plant. Photo by Hyunmin Kim kimhyun81@

The bond maturity is three months, and investors receive principal and interest repayments in early December. When Samsung Electronics and others pay the construction fees to the SPC, the fees are distributed according to the proportion of bond investment. For example, if Samsung Electronics pays 400 billion KRW in construction fees to the SPC, the securitized bond investors share about 300 billion KRW in principal and interest, and Samsung C&T receives the remaining 100 billion KRW.

Samsung C&T has construction orders from major group affiliates amounting to trillions of KRW. A significant portion of the construction revenue comes from semiconductor facility investments at domestic and overseas plants such as Samsung Electronics’ Pyeongtaek plant, Giheung plant, Austin plant in Texas, USA, and Xi’an plant in China. Last year, Samsung C&T won the redevelopment project of Samsung Life Insurance’s Seosomun Building and is also carrying out the construction of the new Hotel Shilla duty-free store. As of the end of the first half of this year, Samsung C&T’s construction division backlog stood at about 25 trillion KRW, with group affiliate orders estimated at 6 to 7 trillion KRW.

Accounts receivable from Samsung Group affiliates, which hold the highest credit ratings in Korea, are considered high-quality assets with stable repayment in the capital market. This is because these are receivables contracted to be paid by top-tier domestic conglomerates such as Samsung Electronics. By utilizing accounts receivable securitization, Samsung C&T can immediately convert future construction payments into cash, reducing operational funding burdens and minimizing interest expenses related to financing. Due to these advantages, construction accounts receivable securitization has become a key financing method for Samsung C&T.

An IB industry official said, "The securitization of Samsung Electronics’ construction accounts receivable is a means for Samsung C&T, the group holding company, to raise funds based on Samsung Electronics’ creditworthiness," adding, "Samsung C&T, which rarely issues corporate bonds, continues to use this method alongside bank loans to secure liquidity." The official also noted, "As Samsung Electronics executes large-scale investments in projects such as the Yongin semiconductor cluster, Samsung C&T’s affiliate order volume will continue, and with market interest rates high, financing using accounts receivable is expected to increase."

This content was produced with the assistance of AI translation services.