Air Incheon, which is set to acquire Asiana Airlines’ cargo business, will raise the necessary funds by increasing the capital of its existing fund. Contrary to previous reports, the cargo business will be separated from Asiana Airlines without taking on any of its debt.
According to sources in the Korean investment banking industry, Socius PE, the major shareholder of Air Incheon, plans to finance the acquisition by expanding the size of its existing blind fund. Currently, Air Incheon’s ownership structure is as follows: Inhwa Precision (99.57%) → Socius PE Fund No. 5 → Socius Aviation (80.3%) → Air Incheon. The plan is to increase the capital of Socius PE Fund No. 5 and channel the funds to Air Incheon for the acquisition of Asiana Airlines’ cargo business. The Socius consortium is reportedly planning to invest approximately 350 billion to 400 billion won into this fund.
Air Incheon will not assume any of Asiana Airlines’ debt. As of now, Asiana Airlines has a total debt of nearly 12.8 trillion won. It is estimated that the cargo business itself holds between 500 billion and 1 trillion won in debt. Ensuring that none of this debt is transferred was a key condition of the sale. An industry insider commented, “It seems likely that this debt-free sale is intended to strengthen the competitive position of the new entity in line with the expectations of the European Union’s competition authorities.”
