Darby Hana raises W580bn to invest in Korean infrastructure

The jointly-managed Korea Emerging Infrastructure Fund will make private equity and mezzanine investments in private companies within Korea’s transportation, environmental, logistics, energy and utilities sectors.

Darby Overseas Investments Ltd and Hana Bank have made a final close on W580 billion (€482 million; $610 million) for the Korea Emerging Infrastructure Fund (KEIF).

KEIF will be managed by Darby Hana Infrastructure Fund Management Company, of which Darby and Hana each own 70 percent and 30 percent, respectively. Darby is an emerging markets-focused private equity firm based in Washington DC. Meanwhile, Hana Bank is a Korean financial institution that has been active in the domestic energy and environmental services markets.

The fund initially aimed to raise W500 billion but was oversubscribed due to strong demand from local investors. Among the Korean institutional investors that have committed capital to the fund are the National Pension Service of Korea, Government Employees Pension Corporation of Korea, Korea Post, Korea Life Insurance, National Agricultural Cooperative Federation, Dongbu Insurance and Kumho Life Insurance.

The new fund will target private companies in Korea’s infrastructure sector, such as those active in transportation, environmental, logistics, energy and utilities. Investments will be made in the form of private equity or mezzanine loans.

Heading up the KEIF investment effort will be Dr Woonki Sung, Darby’s senior advisor for Korea. Sung joined Darby in June 2004 to manage the firm’s Korea portfolio and to set up KEIF. Prior to joining Darby, Sung was the chairman, CEO and president of Korea Infrastructure Fund Management Company. Sung and Darby’s chief executive officer Richard Frank had worked closely together while at the International Finance Corporation – where Sung was the head of IFC’s special operations department that specialised in corporate restructuring operations, and Frank chaired IFC’s private sector group.

Via email, Frank told PEO that the new fund will soon begin investing. “Woonki Sung has assembled a first class team of Korean investment professionals who [have] worked with him before,” wrote Frank. “The team has built up a strong pipeline in the transport and water sectors.”

Also active in Latin America and Central and Eastern Europe, Darby began its push into Asia in 2002, with the acquisition of Prudential Asia Infrastructure Investors, which is now known as Darby Asia Investors Limited and manages the $246 million Asia Infrastructure Mezzanine Capital Fund launched in 1998. More recently, Darby made a first close on its second Asia mezzanine fund.