NEW YORK--(BUSINESS WIRE)--A consortium of private equity firms, led by American private equity firms Cerberus and JC Flowers, has reached agreement to buy HSH Nordbank, the long-troubled German public-sector bank, which nearly collapsed under the weight of its large, distressed shipping portfolio. HSH is one of the world’s largest shipping lenders. The bank, majority owned by the German states of Hamburg and Schleswig-Holstein (with JC Flowers already holding a 5.1% stake), is undergoing a mandatory privatization process, directed by the European Commission in compensation for state aid received. HSH remains burdened by its legacy assets, which have been separated into a non-core bank and are dominated by shipping loans.
What we found noteworthy is that a buyer was finally found and that the buyer has agreed to (1) retain the bank’s core shipping portfolio, while the non-core portfolio will be carved out and transferred to an acquisition vehicle, and (2) pay considerably more, approximately €1.0 billion, than what the press had been reporting (€200 million) but with the reduction to nonperforming assets last year and the negative adjustment to its 2017 results, the bank’s balance sheet will be much healthier than year ago. Taken together, we see this as yet another data point that the global shipping sector may finally be turning a corner.
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