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[Exclusive] ESG investing

Korean insurers finance Carlyle's $2 bn deal with ESG debt

Tiger Alternative arranges $100 mn debt for Carlyle's Flender purchase

By Jun 08, 2021 (Gmt+09:00)

(Courtesy of Tiger Alternative Investors)
(Courtesy of Tiger Alternative Investors)
South Korean life insurers have made an environmental, social and governance (ESG)-themed investment in The Carlyle Group's €2 billion ($2.4 billion) acquisition of German wind energy company Flender GmbH, leading the €79 million ($96 million) debt package put together for the deal.

Last month, a group of institutional investors, led by unidentified Korean life insurers, invested €79 million in a senior debt tranche to finance Carlyle's purchase of the world's No. 1 gearbox supplier for wind turbines, according to investment banking sources on June 8. They declined to identify them.

In October 2020, Carlyle announced the €2 billion acquisition of Flender from Siemens AG. 

Seoul-based Tiger Alternative Investors arranged the debt financing, or sustainability linked loan that incorporates ESG considerations. The so-called ESG debt carries a lower interest rate than other senior debt as long as the borrower complies with  ESG standards. Part of the money saved thanks to the lower interest rate will be donated, or invested in ESG-related companies. 

"Now that domestic institutional investors are showing strong interest in ESG-themed investment products, we expect demand for similar ESG-related financing packages will increase," a Tiger Alternative source told Market Insight, the capital news outlet of The Korea Economic Daily.

Prior to the Tiger Alternative-arranged debt, Carlyle had borrowed about 300 billion won from Korean institutional investors to fund the Flender deal via a South Korean brokerage firm, the Maeil Business Newspaper reported earlier this year. They had provided the loan in a financing syndicate.

Tiger Alternative, founded in 2018, has arranged a series of M&A financing deals, including a $100 million mezzanine loan for KKR's purchase of a US healthcare company in 2019 and €152 million loans in relation to ThyssenKrupp's sale of its elevator division to a consortium in 2020. It had also financed the KKR-sponsored acquisition of a US medical center by an Australian cancer treatment center in 2019 and Blackstone's acquisition of a European construction related-distribution company in 2020.

Write to A-young Yoon at youngmoney@hankyung.com

Yeonhee Kim edited this article.

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