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Lone Star in €6.68bn deal

Lone Star’s Fund III has been selected as a successful bidder for the lion’s share of a giant package of assets sold by the Irish Bank Resolution Corporation.

Lone Star Funds has agreed to buy assets with a total face value of €6.68 billion from the Irish Bank Resolution Corporation (IBRC), previously known as Anglo Irish Bank.

The Dallas-based firm bid for the majority of assets put up for sale under packages dubbed Project Salt and Rock, which are loans initially made by the IBRC before it ran aground in the aftermath of the Global Financial Crisis eventually to become nationalized in 2009.

Lone Star has bought 85 percent of the loans in Project Rock and Salt. The assets amount to 300 borrowers and 1,300 individual loans, with around three quarters of the assets being UK-related real estate loans with the remainder being in Germany and the US.

Those loans not acquired by Lone Star have been bought by a consortium between Sankaty Advisors, the credit affiliate of US private equity firm Bain Capital and Los Angeles-based alternatives investor, Canyon Capital.

“I am extremely pleased with the progress made by the Special Liquidators (KPMG) to date in relation to the disposal of assets in IBRC,” said Ireland’s minister for finance, Michael Noonan, in a statement.

A separate portfolio called Project Evergreen was disposed of last year further reducing the assets set to be transferred to the National Asset Management Agency (NAMA). Said Noonan: “The sale of this entire portfolio on top of the success of the Project Evergreen sale late last year will considerably reduce the amount of assets that are now expected to transfer to NAMA and bodes well for the ultimate success of the liquidation.”

The sales processes for the remaining portfolios in IBRC are on-going and are expected to be concluded shortly, he added.

Project Sand comprises loans with a book value of €1.8 billion; Project Stone comprises approximately € 9.3 billion; and Project Pebble €800 million.

Lone Star is said to have made the acquisition on behalf of its $6.6 billion Lone Star Real Estate Fund III, which has around $7.1 billion of equity when the GP co-investment is considered and which closed last year. The Irish Times newspaper reported that Lone Star was understood to have paid between €3.65 billion and €4.86 billion for the €6.68 billion portfolio.