Meritz Securites funds KKR’s German media group acquisition

Meritz Securities Co. Ltd. has provided 200 million euros ($218 million) in a senior loan to fund KKR & Co.’s $3.4 billion purchase in 2019 of shares in German media group Axel Springer SE.

The loan constitutes roughly a quarter of $900 million KKR raised in debt financing for the share purchases.

The seven-year loan is expected to yield about 5% per annum, according to a source with knowledge of the matter on Feb. 11.

In 2019, the US private equity firm became the second largest shareholder in the German media company with the 45% stake purchase for about 3.1 billion euros ($3.4 billion).

For the acquisition, KKR has raised $2.5 billion from co-investors and the remaining $900 million through acquisition financing with a loan-to-value ratio of 23%, the source added. It was first reported by the Seoul Economic Daily.

Meritz lent part of the senior loan with its own capital as the only Korean financial institution participating in the financing package. It plans to hold the debt until maturity.

Separately, when KKR bought Australian biscuit company Arnott’s for $2.2 billion in 2019, Mertiz arranged 90 billion won ($76 million) debt financing, part of around 800 billion won ($675 million) that KKR borrowed in a senior loan for the deal.

The South Korean brokerage house had also provided a financing commitment to support KKR's bid for South Korea’s top online gaming company Nexon Co. Ltd. of which the auction was abruptly cancelled in 2019.

Mertiz is aiming to expand into the overseas acquisition financing market in partnership with private equity funds.

By Hyun-il Lee

hiuneal@hankyung.com