LONDON, May 17 (IFR) – US private equity firm KKR has signed an agreement with two big Greek banks to expand a new platform that partners with lenders to provide capital and manage exposures to non-core and underperforming assets.
KKR Credit said on Tuesday it aims to expand the platform, called Pillarstone, across Europe and it was “actively evaluating” expanding into more countries.
Pillarstone was launched last June in Italy through a partnership with UniCredit and Intesa Sanpaolo, and KKR said it has signed agreements with Alpha Bank and Eurobank to roll out the platform into Greece. More Greek lenders could join the platform, KKR said.
Loans from large corporate borrowers with a face value of about 1.2bn will be covered under the initial deal with the two Greek banks, a person familiar with the matter said.
That would be similar to the start of KKR’s platform in Italy, where UniCredit and Intesa agreed to pool about 1bn of loans in the initial deal with KKR.
Italy and Greece face some of the biggest challenges in dealing with hefty bad loans on banks’ balance sheets. Policymakers fear the bad loans could take years to work through and could hamper economic recovery.
KKR said the aim of Pillarstone is to provide fresh long-term capital and operational expertise to large corporate borrowers, which should help them stabilise, recover and grow. Banks that sign up would share some of the upside as the performance of the corporate borrowers improves, it said.
“Pillarstone presents an innovative and timely solution to banks across Europe in managing specific underperforming exposures,” said Johannes Huth, head of KKR in Europe, Middle East and Africa.
KKR has not said how much capital it is prepared to put into the platform but said the European Bank for Reconstruction and Development (EBRD) is also considering co-investing in partnership with KKR and the banks.
Noel Edison, EBRD director for insurance and financial services, said after recapitalising the Greek banks last year a more effective management of underperforming assets was an essential next step.
“The platform (Pillarstone) will provide corporates in financial difficulty with new financing and turn-around operational expertise, which are prerequisites to unlocking the inter-creditor impasse and supporting growth in the real economy,” Edison said.
KKR said Pillarstone also signed an agreement in April with Premuda, a shipping company listed in Italy. The agreement aims to strengthen the company through the injection of fresh capital to back a new plan by its management team. As part of the transaction, Banca Carige will join the Italian platform, joining UniCredit and Intesa.
HSBC acted as the coordinator and structuring adviser of the transaction for Alpha Bank, along with Mediobanca for Eurobank. (Reporting by Steve Slater)