South Korea’s private equity house Hahn & Co. and Hana Financial Group have agreed to buy a 100 percent stake in H-Line Shipping, former dry bulk cargo arm of bankrupt carrier Hanjin Shipping, for 1.8 trillion won ($1.45 billion), according to sources on Sunday.

The two firms will create a project fund for the leveraged buyout of H-Line Shipping, which is now fully owned by another fund of Hahn & Co. Under the plan, nearly 45 percent of the acquisition cost will be leveraged.

The move is aimed at shifting H-Line Shipping’s shareholders into long-term investors, a Hahn & Co. official said.

This will mark the first buyout deal that Hana Financial has teamed up with a local private equity firm.

H-Line Shipping currently operates transportation services with 38 dry bulk cargos and seven liquefied natural gas tank ships. Its long-term clients range from Posco to Korea Electric Power Corp., Hyundai Glovis, Korea Gas Corp., and Vale International. H-Line Shipping’s net profit came to 128.3 billion won in 2019, up over 50 percent on-year.

Split off from Hanjin Shipping in 2014, H-Line Shipping was acquired by Hahn & Co.’s private equity fund. As a controlling shareholder, Hahn & Co. executed a bolt-on strategy as H-Line Shipping took over Hyundai Merchant Marine’s dry bulk cargo operation in 2016. The PEF also bought a controlling stake in SK Shipping, a wet bulk carrier maker, in 2018.

Hahn & Co. oversees some 8.1 trillion won assets, the second-largest among Korea-based private equity firms. Its portfolio ranges from cement maker Ssangyong Cement Industrial, automotive air control equipment maker Hanon Systems, hospitality firm Lahan Hotels and HCAS, a used car sales platform known for K Car.

By Son Ji-hyoung (consnow@heraldcorp.com)