Hyundai, KTCU, Kamco launch $273 mn fund to aid auto parts makers

Hyundai Commercial Inc. and several local financial companies have set up a blind fund worth 300 billion won ($273 million) to provide liquidity to automobile subcontractors, hit by the coronavirus pandemic.

According to the investment banking industry on Dec. 18, the fund, managed by Multi Asset Global Investments Co., has already extended a combined 100 billion won to six auto parts makers.

The fund is made up of 200 billion won in secured senior debt and 100 billion won in unsecured subordinated loans.

The state-run debt clearer Korea Asset Management Corp. (Kamco) chipped in 100 billion won, followed by the Korean Teachers’ Credit Union (KTCU) with 90 billion won and Hyundai Commercial, the machine and corporate finance unit of Hyundai Motor Co., with 30 billion won. Some local financial institutions committed the remaining 80 billion won to the fund.

The fund will be operated for five years with a target return rate of 5% per annum.

Fund managers said the funds will be extended to auto subcontractors in the form of asset-backed loans (ABS), with their accounts receivable as collateral, after a review by Hyundai Commercial and other Hyundai Motor units.

Through the screening process, investors will be protected against potential losses.

Write to Jun-Ho Cha at chacha@hankyung.com
In-Soo Nam edited this article.