It is now oficial: Lone Star is the best-placed bidder to acquire Novo Banco
It’s confirmed: the North-American fund is the “best-placed” offer for the acquisition of Novo Banco. The two other proposals will still be improved, says the Bank of Portugal.
The Bank of Portugal had three offers on the table for the acquisition of Novo Banco: China Minsheng, Apollo/Centerbridge and the North-American private equity fund Lone Star. The Bank of Portugal chose to pursue further talks on the acquisition negotiations with the latter, the American fund which focuses mainly on real estate, but has increased its exposure to the financial sector both in the USA and in Europe.
“Based on the information available to date [the Bank of Portugal concludes] the potential investor Lone Star is the best-placed entity to successfully complete talks on the acquisition of Novo Banco’s shares and [the Bank of Portugal] decided to invite the fund for further negotiations”, is stated by the Bank of Portugal in a press release.
The proposal made by the potential investor Lone Star gives the best assurances that these goals will be met [the stability of the financial system and the reinforcement of the trust in the future of Novo Banco], but presents some constraints, namely a possible impact on public accounts, which will be sought to be decreased or removed during the negotiations now beginning.
“The stability of the financial system and the reinforcement of trust in the future of Novo Banco are two main goals for the sale process”, states the Bank of Portugal, highlighting that “the proposal of the potential investor Lone Star is the one that best meets these goals, but presents but presents some constraints, namely a possible impact on public accounts, which will be sought to be decreased or removed during the negotiations now beginning”.
Lone Star’s proposal for Novo Banco implies a state’s guarantee – the so called Asset Protection Scheme (APS) on the ‘side bank’ assets, which includes real estate and other non-core assets from Novo Banco.
In spite of being the front runner, Appolo/Centerbridge and China Minsheng still have room to improve their offers, as the Bank of Portugal states in the press release: “The negotiations with the potential investor Lone Star do not exclude the improvement of the remaining bidders’ offers who handed in proposals for both sale procedures and have shown themselves available to do so”.
Nonetheless, the choice made by the Bank of Portugal is just a recommendation: it is the Portuguese government who has the final say. As the Portuguese minister of Finance stated: “Nothing is off the table when it comes to assuring the financial system’s stability” – meaning, nationalizing the bank: “I do not think it is appropriate to eliminate any type of approach for Novo Banco”.
