Shinhan Securities Participates in Acquisition Financing for Sale of German Siemens Subsidiary... Expanding Global Portfolio
PEF Triton Partners Provides Acquisition Funding to Trench Group
Domestic Securities Firms Expand Participation in Global M&A Deals
Domestic securities firms are increasingly participating in acquisition financing (M&A loan transactions) necessary for mergers and acquisitions (M&A) of global companies, showing strong performance. It is evaluated that domestic securities firms are establishing themselves as key players in the global acquisition financing market, which was once the exclusive domain of American and European investment banks (IBs).
According to the IB industry on the 26th, Shinhan Investment Corp. recently provided acquisition financing worth 335 million euros (approximately 500 billion KRW) together with Germany's Commerzbank and others to Triton Partners, a UK-based buy-out private equity fund (PEF) manager.
The lending syndicate secured 100% of the shares of Trench Group, a German Siemens-affiliated high-voltage power components company, which Triton Partners is acquiring, as collateral. Shinhan Investment Corp. is reported to have supplied about 50 million euros (approximately 73 billion KRW) of the total acquisition financing.
Triton Partners recently decided to acquire all shares of Trench Group, a high-voltage transmission and substation components manufacturer previously held by Siemens Energy, through a special purpose company (SPC) established for the M&A, Saphira German Master Bidco GmbH. The acquisition price has not been disclosed.
Trench Group is a global leading company manufacturing high-voltage power products such as measuring instruments, transformers, bushings, and coils. Siemens recently suffered significant losses due to quality issues with its wind turbine business subsidiary Siemens Gamesa and has begun restructuring its wind power business. In this process, it is understood that Siemens Energy’s affiliate Trench Group shares were sold to Triton.
In December last year, Shinhan Investment Corp. also supported acquisition financing of 28.6 million dollars (approximately 39 billion KRW) for the acquisition of the US cybersecurity solutions company Optiv Parent Inc. This was through the refinancing process of loans previously held by Jefferies Leveraged Credit Products, LLC. At that time, the total acquisition financing executed by the lending syndicate amounted to 650 million dollars (approximately 878 billion KRW).
KB Securities also arranged acquisition financing worth 150 million dollars (approximately 204 billion KRW) last year for the US-based PEF manager Kohlberg Kravis Roberts (KKR), which acquired Simon & Schuster, one of the top three US publishers. They participated in acquisition financing of 1.21 billion dollars (approximately 1.64 trillion KRW) out of the total 1.62 billion dollars (approximately 2.2 trillion KRW) needed for the publisher acquisition. KB Securities also arranged acquisition financing of 150 million dollars (approximately 203.8 billion KRW) for the acquisition of global business process outsourcing (BPO) company VXI Global Solutions.
Securities firms are known to source acquisition financing deals through global financial company networks of their Hong Kong or Singapore subsidiaries. An IB industry official said, "As the global networks of Korean financial companies expand, the portfolio of acquisition financing supplied for large-scale M&As between overseas companies or PEFs is increasing."
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The increased capital strength and funding competitiveness of domestic financial companies are also cited as reasons for the rise in participation in global acquisition financing. A representative in charge of acquisition financing at a major securities firm said, "Recently, amid the global interest rate hike trend, domestic financial companies have gained relative competitiveness in funding costs, leading to more opportunities to participate in deals."
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