As it discusses selling 25 percent of its stake in Korea Exchange Bank, Texas-based private equity firm Lone Star is also getting read to sell German Bank IKB, with the deal expected to be completed in the first quarter of 2011 according to Reuters. IKB was the first German victim of the U.S. subprime mortgage crisis and Lone Star bought 91.5 percent of the bank’s shares after it was bailed out by Germany. No price has yet been announced.
(Reuters) – Lone Star is getting ready to sell German bank IKB and could strike a deal in the first quarter of 2011, the U.S.-based private equity company’s European head told a German newspaper.
“Together with our adviser Perella Weinberg, we will present possible interested parties to IKB in November,” Bruno Scherrer told Handelsblatt in an interview published on Wednesday.
IKB, known before the crisis mainly as a lender to mid-sized German companies, shot to fame in 2007 as the country’s first casualty of the subprime mortgage crisis in the United States, when billions of euros of its investments turned sour.
After a bailout, German state bank KfW [KFW.UL] sold IKB to Lone Star [LS.UL], which now owns 91.5 percent of the lender’s shares.
“There are not so many way to get access to German medium-sized companies. That could be interesting for a bank,” Scherrer told the paper.
“Maybe also for a solution in which financial investors or sovereign funds play a role.”
Scherrer said Lone Star had already been approached by a party interested in IKB but said it was too soon to sell the bank at that time. He provided no details.
He also declined to comment on the price for which Lone Star hopes to sell IKB.
Lone Star is also buying German bank Duesseldorfer Hypothekenbank, which Scherrer said the private equity company will restructure into a cleaned-up platform for the market for Pfandbriefs — a form of covered bonds.
“That could be attractive to foreign investors,” he said.
Asked whether Lone Star plans to do more deals in Germany, he said: “We learned a lot in Germany. That could certainly be useful in the consolidation of the landesbanks sector.”
(Reporting by Maria Sheahan; Editing by Michael Shields)