Hana Financial to arrange $445 mn financing of US gas power plant

Hana Financial Investment Co. Ltd. is tapping South Korean insurers and savings funds to arrange a 500 billion won ($445 million) financing of a new natural gas-fired plant in Maryland in which a Korean power utility is expected to participate as a strategic investor, according to a newspaper report.

The South Korean brokerage firm plans to complete the arrangement as early as this month for the Panda Mattawoman Power Project, a 990 MW natural gas-fired combined-cycle power generating facility in Brandywine, Maryland.

The project financing is expected to deliver annual returns in the range of five to 15%, depending on the seniority of claims, InvestChosun, an online outlet of the Chosun Ilbo daily, said on June 7.

No further details on the financing structure were reported, including whether the 500-billion-won financing consists of both equities and debt, as well as which level of tranches Hana is arranging underwriting for.

The plant is expected to be operational from 2019 after a 30-month construction.

“Should a KEPCO unit participate in management (of the Mattawoman Power Project) through an equity investment, it will become the first such investment by a KEPCO unit (in a US power plant),” an insurance firm’s alternative investment source was quoted as saying by the newspaper. “In that respect, it would be considered a safe investment.”

It was not known which of KEPCO units would invest in the natural gas-fired plant.

JPMorgan Ventures Energy Corporation reportedly has an equity interest in the plant project owned by Panda Power Funds, a private equity firm.

Hana has been leading South Korean brokerage firms in financing arrangement for overseas power plants, as domestic investors are piling into energy facilities and infrastructure in search of steady returns.

Last January, Hana arranged $200 million debt financing for a 1,485 MW gas-fired combined cycle power plant under construction in Pennsylvania, becoming the first Korean firm to underwrite a tranche of debt facilities as a whole.

The Mattawoman plant will provide power to the PJM energy market, the largest US power market.

Moody’s Investors Service estimated in a recent report that new natural gas plants coming online between 2016 and 2020 in the PJM market will boost gas power capacity by as much as 25%, and drive down market power prices with little prospect of demand growth.

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