The two accepted bidders for the Espírito Santo family’s ‘jewel in the crown’ Comporta estate are Pedro Almeida, a successful former stock broker and oil trader who has returned from Switzerland to live in Portugal, and Orion Capital Managers, LLP, a European real estate private equity ﬁrm owned by the founders, Aref H. Lahham, Van J. Stults, and Bruce C. Bossom.
Two of the Orion Capital partners held discussions in the past with Asher Edelman and David Storper of Amory Merchant but these did not lead to any working arrangements for the purchase of the Comporta Estate, probably as Orion is known for deals with a shorter pay-back time than many of those handled by Armory Merchant.
Asher Edelman was in Lisbon last weekend on a social visit to Portugal and by chance was introduced to Pedro Almeida who informed the American that his bid for Comporta had been accepted: “I am going to get it,” boasted the Portuguese businessman.
This is despite Almeida’s admission that he knew many of the Espírito Santo family members who also are shareholders in the companies that control Comporta and this extended to a friendship at Haitong Bank, presumably with José Maria Ricciardi before his sudden departure from the Chinese-owned bank last Friday, December 9th.
This ‘knowing family members’ aspect has been a key part of the continued refusal by Haitong to accept a bid for either Comporta estate company from Asher Edelman and Armory Merchant yet inside 'family' contact has been deemed acceptable for the other bidders.
Edelman informed algarvedailynews.com that the continued rejection by Haitong Bank, the institution charged with advising the Luxembourg administrators responsible for the Comporta sale, is curious when the two parties whose bids now seem to have been accepted have been in touch with family shareholders and also with brothers Caetano and Carloto Beirão da Veiga who have day-to-day control of the Comporta estate companies.
The two successful second rounds bids are said to be around €50 million each, thus undervaluing the business by an estimated €200 million.
When Edelman first was rejected by Haitong ‘as he knew family members and had been in touch,’ the financier offered to resubmit a bid on the understanding that he would not continue any contact. This was refused and the bidding rules amended to include ‘or having previous contact with shareholders.’
When asked about the sudden exit of Ricciardi from the top job at Haitong Bank, Edelman said the surprising thing was that the CEO has gone before his contract was up for renewal and therefore Ricciardi would not be in position to sign off the year’s accounts as would be normal when a contract is not renewed.
On the Lisbon grapevine, Ricciardi’s 2014 whistle-blowing on Ricardo Salgado’s convoluted and allegedly illegal business methods, in return for a degree of immunity, may have left the government wishing it had not taken the bait as Ricciardi may not be as squeaky clean as he had claimed.
As for the Comporta deal, Edelman has written to the Rioforte Investments's Luxembourg administrator (a firm of lawyers, rather than a civil service appointment) to explain that the appointment of Haitong as a key advisor to the sale of the Comporta estate was a grave error as the bank was being run by an Espírito Santo family member so could hardly be considered independent or working for the best interests of creditors.
The American deal-maker is to write to Haitong Bank to ask them to accept a bid.
Of the two bidders in the second round, Pedro Almeida and Orion Capital Managers, at least one, if not both, has been in touch with State-owned Caixa Geral de Depósitos which is owed around €106 million by the Comporta companies. Caixa Geral holds charges on Comporta estate property assets, although in the past Caixa Geral's managers have been unable to pinpoint exactly which assets these are.
With the current mess and muddle at Caixa Geral over its ‘in-out’ directors and the bank’s recapitalisation involving writing off billions of euros of non-recoverable debts, the possibility of a mates’ deal over the Comporta debt to Caixa Geral is a real one.
The undervaluation of the Comporta estate to benefit those ‘in the know’ and the blocking of serous bids from those outside the magic circle, could deprive creditors of Rioforte Investments (Rioforte Investments owns a 59.09% stake in ‘Herdade da Comporta - Fundo Especial de Investimento Imobiliário Fechado’ and a 58% stake in ‘Herdade da Comporta - Atividades Agro-silvícolas e Turísticas S.A.’)
Algarvedailynews.com wrote on Monday to the acting CEO of Haitong Bank to ask for comments on the bank’s involvement in the Comporta estate sale stitch-up. No reply has yet been received from Hiroki Miyazato who, as Japanese national, will understand the deep shame that will be expected from those responsible for those involved in this very Portuguese affair.
On a related topic, Asher Edelman was asked about the US view on investing in Portugal.
The answer came that there have been a few sizeable deals, and Apollo-Centerbridge is in the final line-up to buy Novo Banco, “but after the Bank of Portugal’s State-sponsored confiscation of €700 million from Goldman Sachs and its investors in 2015, heavyweight US investors are not interested in a country where the government’s Central Bank is allowed to act in such a manner.
“Goldman’s eager entrance into Salgado’s bank (Banco Espírito Santo) through their Portuguese advisor on its international consultative council, José Luís Arnaut, was a poorly researched misstep. Probably, less rush and more study would have saved Goldman’s clients from the loss.
“There are plenty of deals to be done in Portugal but don’t rely on the US to provide the money. If Portugal’s banking system wants to continue to behave as it has in the past, if the legal system remains inert and if the old ruling families are allowed to continue their games, overseas investment in Portugal will continue to be weak.”