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Biz News Korea(Eng)

S. Korean public funds to invest in aircraft financing fund

Collected: 2017.04.15

Distributed: 2017.04.17

Source: Go Direct

South Korean institutional investors including pension manager Public Officials Benefit Association and the country’s leading commercial lender Shinhan Bank will invest 230 billion won ($202 million) in a fund designed by global institutional alternative investment firm Castlelake L.P. to seek profits through aircrafts leased out to airlines.

According to investment bank industry sources on Friday, Shinhan Bank, Public Officials Benefit Association, and Korea Scientists & Engineers Mutual-aid Association recently decided on investing in a blind fund, worth 1.1 trillion won, created by U.S-based investor Castlelake.

The Korean investors reportedly will invest between 30 billion won and 60 billion won each in the fund, and sovereign fund Korea Investment Corp. and Teachers’ Pension are also mulling to join in the investment. It is the first time for the Korean institutional investors to invest in an aircraft financing fund.

Castlelake has already raised nearly 870 billion won from overseas investors and plans to draw additional 230 billion won from Korean investors for its blind fund named “Castlelake Aviation Stable Yield.” The fund will be used to acquire airplanes that have been in use for between 4 and 13 years and leased them out to airliners. The investment is expected to yield 10 percent or more internal rate of return (IRR) by generating cash from leases, according to the industry sources.

Established in 2005, Castlelake is an alternative investment firm with strength in aircraft finance. It manages private funds with more than $8.9 billion in assets as of December 31, 2016.

By Song Gwang-sup

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