The Bank of Portugal’s state of inertia was rudely interrupted last Friday when it received a knock-out bid of €4 billion for Novo Banco.
The bid was not an enhanced offer from Lone Star, with which the Bank of Portugal is said to be negotiating ‘exclusively’, but from Aethel Partners which has sent a letter of intent and a new proposal to acquire the loss-making Portuguese bank in a deal that could return €4 billion to the Resolution fund.
Aethel Partners, of 42 Berkley Square, is run by Ricardo Jorge dos Santos Silva and Ms Aba Rosa Schubert, who say they will have the support of institutional investors, as yet unidentified, and propose to keep their stake for at least five years.
Aethel Partners is British and was told early on that it could only join in the bidding process for Novo Banco if it joined one of the two funds already in the race: Lone Star or Apollo-Centerbridge.
Aethel Partners will create a company specifically to bid for Novo Banco and the owners are keen to separate themselves from an earlier involvement with Pivot SGPS and the corrupt politician, Miguel Relvas, where they became involved at arm's length in the Banco Efisa scandal as Pivot was their client. (See: 'Miguel Relvas to be questioned over sale of Efisa Bank')
Lone Star was selected by the Bank of Portugal to negotiate exclusively and several conditions have been announced and met by the Americans.
One such condition was the involvement of Portuguese investors, and Lone Star dutifully sent a letter to various Portuguese businessmen to invite them to invest in Novo Banco. It is not known if any received the letter and what their replies have been, if any.
In the Aethel Partners bid, the Resolution Fund will receive €3 billion with a further billion available as a capital increase.
The Lone Star bid has degenerated into an unnecessarily complex deal with only €750 million on the table and the State retaining a shareholding.
The reaction of the Government and the Bank of Portugal to this proposal is not yet known but the figures being bandied about are tempting and way over the Lone Star bid.
The Bank of Portugal may already have committed itself to a sale of Novo Banco to Lone Star.
The exclusivity of the negotiations between the Banco de Portugal, the Government and Lone Star currently makes it difficult to reach a decision on the new offer by Aethel Partners.
"The Bank of Portugal has decided to select the Lone Star investor for a definitive phase of negotiations, in conditions of exclusivity, with a view to finalising the terms in which the sale of the Resolution Fund's participation in the New Bank may be completed."
This statement from the Bank of Portugal governor, Carlos Costa, dated February 20th, left he field open to only one potential buyer, Lone Star, to the exclusion of Apollo-Centerbridge and the Chinese bank, Minsheng.
In any event, it is not clear whether Aethel will be able to enter the proceedings. In the terms of reference available on the Resolution Fund website, which guided the Novo Banco divestment process, "any additional rules on the strategic sale procedure approved by the Bank of Portugal will be disclosed in due course to investors who are participating in the Procedure at the relevant time."
"Banco de Portugal reserves the right, at its discretion and at any time, to modify the rules of the strategic sale procedure, or even to cancel it, in particular, should the Bank of Portugal decide to follow another sales procedure in order to achieve the maximisation of the value to be obtained with the sale of Novo Banco."
There has been no comment from the government but this sort of mess is par for the course with Carlos Costa when involved in any negotiation involving more than deciding on whcih main course to choose at lunchtime.
“Aethel Partners LLP is an advisory firm. The firm specialises in structuring, advice, and capital raising for corporate and institutional clients. It also caters to buy-side clients by offering investment origination and execution tailored to geographic, thematic, and technical targets. The firm specially focuses on credit and special situations. It is global in reach and sector agnostic. Aethel Partners LLP is headquartered in London, United Kingdom.”