JKL Partners bets on travel recovery with $70.7 mln investment in T’way Air The PE firm is set to invest $70.7 mln in the low-cost carrier

Translated by Ryu Ho-joung 공개 2021-03-23 08:11:49

이 기사는 2021년 03월 23일 08:08 더벨 유료페이지에 표출된 기사입니다.

Private equity firm JKL Partners is set to invest 80 billion won ($70.7 million) in low-cost carrier T’way Air, betting on a post-pandemic recovery in travel.

T’way Air’s board agreed to issue 80 billion won worth of convertible preferred shares to a special purpose vehicle that will be set up by JKL Partners, according to a regulatory filing on March 16. The proceeds will be used for working capital purposes and to better position the company in the post-pandemic environment. The transaction is expected to be completed on April 1.

The fundraising follows the carrier’s rights issue of 66.8 billion won in November last year for working capital requirements. But the company has continued to be struggling, like other airlines, as the second wave of the Covid-19 pandemic hit the world during last winter.

T’way Air recorded an operating loss of 174.3 billion won and a net loss of 137.9 billion won on a consolidated basis for the year ended December 31, 2020.

“We were looking for an investment opportunity in the aviation sector and approached T’way Air through an advisory firm,” Kang Min-kyun, partner and founding member of JKL Partners, told the bell in a phone interview on Friday.

T’way Air was in a “sweet spot” among the firm’s potential targets, said Kang, because flag carriers Korean Air Lines and Asiana Airlines are currently in the process of integration and Jeju Air, the low-cost airline owned by consumer goods giant Aekyung Group, is relatively large.

He added: “The investment has met each other’s needs as T’way Air was in need of more funds.”

JKL Partners is also considering making an additional investment in the carrier if a recovery in travel demand drags on.

“Many flights will likely continue to be grounded for the most part of this year, but we expect air travel demand will gradually revive early next year,” said Kang. “We are considering investing more money (into T’way Air) if necessary, though this is a matter that should be discussed with T’way Holdings (the largest shareholder of T’way Air) and its owner Yearim Co.”

Kang will join the carrier’s board as an internal director, which would allow him to more closely monitor the company’s financial position. His appointment on the board will be passed at the company’s general meeting scheduled for March 31.

JKL Partners aims to exit the investment in five years. Kang said, “The investment will be funded through our existing fund with no strategic investors involved,” adding that “Selling the stake to the largest shareholder in the carrier is also included in our exit options, depending on situations.” (Reporting by Gyoung-tae Kim)
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