Busan International Financial Center Muhyeon Innovation City Complex Development 365 Billion PF

Maxerve Consortium Launches Full-Scale Phase 3 Development Project
Shinhan Investment Corp., Korea Investment & Securities, Daewoo E&C Participate

Busan International Finance Center (BIFC) exterior view (Provided by Busan City)

[Asia Economy Reporter Lim Jeong-su] Financing of 365 billion KRW has been secured for the Busan International Finance Center Munhyeon Innovation City complex development project. The recruitment of the lending group proceeded smoothly with the participation of Shinhan Financial Investment and Korea Investment & Securities, who invested equity in the project entity, the Maxserve Consortium.

According to the investment banking (IB) industry on the 6th, the Maxserve Consortium received a project financing (PF) loan of 365 billion KRW from domestic financial companies as the lending group. The recruitment of the lending group was completed by dividing the loan into senior tranche of 265 billion KRW, mezzanine tranche of 55 billion KRW, and junior tranche of 45 billion KRW according to collateral and repayment priority.

The Maxserve Consortium will use the raised funds for the third phase of the Busan Munhyeon Innovation City complex development project. A complex facility with 5 basement floors and 45 above-ground floors (total floor area of 147,000㎡) will be built on a site of 10,293.8㎡ (approximately 3,119 pyeong) within the Busan International Finance District. The complex building will include office-type knowledge industry centers as well as support facilities such as educational research facilities and daycare centers.

Daewoo Engineering & Construction is in charge of construction and has provided a completion guarantee agreement. If the construction permit is not obtained within the deadline, the burden of repaying the PF loan will fall on them. The third phase of the Munhyeon Innovation City development project received building approval last October, with plans to start construction and sales in February next year and complete it around 2025.

The Maxserve Consortium consists of six companies including the lead company Maxserve, construction companies Daewoo Engineering & Construction and Ilchang Construction, and financial companies Shinhan Financial Investment and Korea Investment & Securities. Busan Urban Corporation, the project owner, selected the Maxserve Consortium last year as the preferred private developer for the third phase of the Munhyeon Innovation City complex development project.

The Munhyeon Innovation City complex development, which began in 2008, is a project divided into three phases to integrate and develop public institution headquarters such as the Bank of Korea, Korea Technology Finance Corporation, and Korea Housing Guarantee Corporation, along with the financial district and support facilities. The first phase of the complex development (approximately 24,800㎡), the 63-story supertall Busan International Finance Center (BIFC), was completed in 2014. For the second phase (12,200㎡), Silverstone selected DL E&C (formerly Daelim Industrial) and Yurim E&C as constructors to build two buildings up to 49 floors high, including officetels and hotels.

An IB industry official stated, "The second and third phase projects, which had been stalled for a long time due to issues such as land ownership transfer, have accelerated as PF financing has been completed, allowing Munhyeon Innovation City to begin construction up to the third phase about 13 years after the project started."