Espírito Santo Group subsidiary Tranquilidade will be sold to the Apollo Global Management for €50 million.
Details of the agreement are being closely guarded, but for Novo Banco taking temporary ownership of the insurer for the transaction to be completed.
The €50 million price tag is somewhat adrift from the recent valuation of Tranquilidade of €500 million, or €700 million of you take the Espírito Santo Group valuation, but this reflects the desperation of Espírito Santo Group to sell off any assets which still have value, and the debts that Tranquilidade was obliged to accept during the final days of the fantasy regime of Ricardo Salgado.
One of the known moves by Salgado was to remove €15 million from Tranquilidade just before Espírito Santo Group collapsed.
Normally an extraordinary dividend would be distributed to all shareholders, not just one, but Salgado was desperate at the time and used his Maxwellian powers to pinch this not inconsiderable sum, not that he has admitted doing anything wrong at any time.
The Espírito Santo Group’s €15 million act of piracy went unrecorded as the Tranquilidade prospectus was sent to interested parties, just before Espírito Santo Group asked for protection from its creditors.
This corporate theft brings the total that household name Tranquilidade has lost in the Espírito Santo Group crash to €165 million.
A big chunk of the damage is because between May and June 2014 Tranquilidade was obliged to take on €135 million in Espírito Santo Financial Group (EFSG) and Espírito Santo Financière SA.(ESFIL) loan paper - which now is worthless.
Add to this the missing €15 million and the total so far shows the depths to which a respected and profitable insurer can sink when part of the game being played by a desperate Espírito Santo higher management.
These shenanigans have resulted in Tranquilidade’s sale price of €50 million, some suggest the American’s have over paid even at this level.
The Insurance Institute of Portugal has approved the Tranquilidade sale and will be one of the first to complain when the American company, having bought cheap and no doubt with guarantees, splits up the company, loads it with debt, sells off its freeholds, and walks away with its opportunistic millions after 1-2 years' work.
Apollo Asset Managament’s mission statement does not make comforting reading for those wishing Tranquilidade to carry on as before;
“Apollo Global Management, LLC is a leading global alternative investment manager. We are contrarian, value-oriented investors in private equity, credit and real estate, with significant distressed expertise. We operate our businesses in an integrated manner which we believe distinguishes us from other alternative investment managers. We have applied this investment philosophy over our 24-year history, deploying capital across the balance sheet of industry leading businesses, and seeking to create value for our investors throughout economic cycles.”
Reading through the corporate nonsense one sees that this company is an asset stripping venture capitalist of the first order, no problem with that but Portuguese fur will fly when Apollo achieves its objectives.