Mirae plans US$2bn fundraise to fund US hotel portfolio acquisition

Mirae Asset Group is planning to raise US$2bn (€1.8m) via funds to help finance the US$5.5bn Anbang US hotel portfolio acquisition.

Sources in Seoul told IPE Real Assets that a structure involving six private vehicles is being developed to raise equity to finance the acquisition which was backed by Mirae Asset subsidiaries.

The key investor Mirae Asset Securities (Mirae Asset Daewoo), is likely to contribute US$1.5bn, with Mirae Asset Life putting up around US$420m and Mirae Asset Capital investing around US$80m.

One industry source told IPE Real Assets: “I think the US$1.5bn investment is a huge amount for Mirae Asset Securities. Its cost of capital will be quite high (and) I believe it will try to sell down its interest to external investors.”

Another source said: “I have reservations as to how well Mirae Asset will go in raising capital for these funds. I doubt the demand for such an investment is present in our market.

“As a general rule, Korean investors are not keen on hotel investment.”

The Anbang deal, announced Wednesday, has been described as the largest single cross-border transaction yet undertaken by a Korean financial group.

The hotels are located in a number of US cities, including New York, San Francisco and Los Angeles, and include the Westin St. Francis in San Francisco, the Loews Santa Monica Beach Hotel, the JW Marriott Essex House in New York and the Four Seasons in Jackson Hole, Wyoming.