South Korea’s KB Financial Group Inc. announced on Thursday that it pooled in multiple financial institutions to arrange project financing worth $660 million (about 756.3 billion won) for the acquisition of a power generator in the U.S.

Project finance is the financing of long-term infrastructure, industrial projects and public services based upon a non-recourse or limited recourse financial structure, in which project debt and equity used to finance the project are paid back from the cash flow generated by the project.

The country’s top financial group led a team of financial institutions at home and abroad to come up with the funding for a M&A deal achieved by U.S.-based Starwood Energy Group.

Its pool of investors included KB financial units, Hyundai Marine & Fire Insurance, Lotte Non-Life Insurance Co., Mirae Asset Life Insurance Co. and National Credit Union Federation of Korea, as well as global financial institutions such as Credit Agricole and ING Bank.

The senior loan arranged by KB Kookmin Bank amounted to $200 million, or 30.3 percent of project financing. Among the loan, KB Kookmin Bank directly invested $50 million and KB Life Insurance invested $20 million in the form of a fund. The seven-year loan was priced at 325 basis points to 375 basis points over the London inter-bank lending rate (Libor).

KB Financial Group said KB Financial units have taken the lead in attracting investors. KB Asset Management formed a project fund for local investors and KB Investment & Securities sold the fund. KB Life Insurance directly invested in the fund.

U.S.-based investment company Starwood Energy Group acquired the energy center with the senior loan arranged by KB Financial Group at $800 million. The center is a 790-megawatt thermoelectric power plant located in Pennsylvania.

By Park Yoon-ye

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