The Aethel Partners fund has presented a 3.8 billion euros' offer to acquire Novo Banco. The proposal surpasses all others - but is it viable?
Could there be a new candidate to acquire Novo Banco, at the 25th hour? Yes and No. The Aethel Partners fund, based in London and headed by the Portuguese Ricardo Santos Silva, has presented a global offer of 3.8 billion euros, an amount that no other candidate surpassed in well over a year of negotiations for Novo Banco. The problem is that the offer is subject to an indemnity from the Resolution Fund to investors who are suing the Portuguese State and are part of Aethel’s consortium — and would, of course, have to drop those proceedings.
Aethel Partners sent a letter to the Portuguese Government and the Bank of Portugal on February 24, which was not exactly and offer, but a letter of intent, in which the fund quotes the New Zealand Superannuation Fund, the Silver Point Capital and the Elliot International, three institutional investors that belong to Aethel Partners who invested in the vehicle created by Goldman Sachs, the Oak Finance. The financial society Oak Finance invested 835 million dollars in bonds from BES that, once already part of Novo Banco, returned to the ‘bad bank’; those investors filed lawsuits against the Bank of Portugal, of course, which are still ongoing.
Aethel Partners acknowledges they will pay at least 2.8 billion euros to the Resolution Fund for 100% of Novo Banco and, on top of that payment, the fund will take on a billion euros’ recapitalization of the bank created from BES. This means the lawsuits currently in court will have to be dropped, but, in return, the fund demands an indemnity from the Resolution Fund.
The Portuguese Government and the Bank of Portugal refrained from commenting the letter sent by Aethel, because of the exclusive negotiations which are being carried out with Lone Star according to the terms of the sale that began in January 15, 2015. Even so, as a source from the State participating in the negotiations told ECO, “it is not possible to ignore that a letter was sent” and, therefore, “the due diligence process will be done in order to assess what is at stake” in the proposal.