JPMorgan to launch first LBO financing of the year

JPMorgan will next week launch a $230 million syndicated loan for Haitai.
Market sources say JPMorgan will launch a syndicated financing for the Korean firm, Haitai. The mandate is all the sweeter for JPMorgan because a consortium that included JP's own private equity arm recently bought the confectionery company.

JPMorgan is to lead a $230 million acquisition financing for Haitai, a firm which has a leading 20% market share in the Korean confectionery business. Haitai was recently auctioned by ABN AMRO to a private equity consortium comprising JPMorgan Capital Partners, CVC and UBS Capital. The deal marks the first LBO financing of the year, and could set a trend for further deals from Korea.

Sources say the loan will be a dual currency facility in dollars and won, a facility that will take advantage of the rampant liquidity in the Korean won bank lending market. The tenor will be five and seven years.

While there are no indications as yet of pricing levels, the fact that many banks across Asia are anxious to put on assets (in the wake of excess liquidity) could mean that the deal sees aggressive demand.

A recent deal for LG Philips – led by JPMorgan, Citibank and ABN AMRO – presages well. The $2 billion deal was also acquisition-driven, and saw a phenomenal participation from 44 banks.

Citic Ka Wah Bank, Lloyds-TSB, Bumiputra Commerce Bank and the Commercial Bank of Greece were among the names not usually associated with an appetite for Korean credit.

The LG Philips deal was split into a five-year $1.35 billion tranche and a $650 million three-year revolving credit facility, with a Korean won component to the latter. It had an all-cost of around 135bp over Libor.

Market sources expect the Haitai deal to be priced slightly wider.

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