Lone Star Said to Buy Most of $10.5 Billion Irish Bank Loans

Lone Star Funds, a U.S. private-equity firm, won an auction to purchase almost all of the former Anglo Irish Bank Corp.’s 6.3 billion-pound ($10.5 billion) U.K. loan book, two people with knowledge of the matter said.

Lone Star bought about 85 percent of two U.K. portfolios, called Project Rock and Project Salt, from the failed Irish lender’s liquidators for about 65 percent of the par value, said one of the people, who asked not to be identified because the details are private. The liquidators at KPMG LLP in Dublin confirmed that Lone Star bought part of the loans, with a group comprised of Sankaty Advisors LLC and Canyon Capital Advisors LLC acquiring another portion.

“The special liquidators are very pleased with the successful conclusion of loan sales,” they said in a statement, without disclosing how much of the portfolio Lone Star bought. Officials from Lone Star declined to comment.

The deal is the biggest since Anglo Irish was nationalized in 2009. The company later merged with smaller, failed lender Irish Nationwide Building Society and was renamed Irish Bank Resolution Corp. The government put the commercial real estate-focused institutions into liquidation a year ago as part of an accord to restructure its 34.7 billion-euro ($47.7 billion) bailout cost.

Noonan’s Announcement

Irish Finance Minister Michael Noonan said on Jan. 16 that the liquidators were set to sell “more than half” of a 22 billion-euro loan portfolio without incurring additional losses to taxpayers. IBRC’s liquidators said in December they had agreed to sell 84 percent of 2.5 billion euros of par-value Irish corporate loans.

Lone Star Chairman and founder John Grayken has been scouring Ireland in the wake of western Europe’s biggest real estate crash in 2008. The firm has sought assets being sold by Allied Irish Banks Plc and Lloyds Banking Group Plc and was among three companies that won the bidding for $9.2 billion of U.S. loans sold by IBRC in 2011.

The hunt for Irish assets is part of a wider search on the part of U.S. investment firms for large portfolios of distressed European assets. Lone Star, Cerberus Capital Management LP, Fortress Investment Group LLC and Apollo Global Management LLC dominate the market, according to a Cushman & Wakefield Inc. report last month.

Sales of real estate loans across the region this year could increase by a third to about 40 billion euros as bad banks in Ireland, the U.K. and Spain seek deals, Cushman & Wakefield said in the report.

“You can call this the mega-portfolio year,” Federico Montero, a London-based parter at the property broker, said in an interview. “It’s a way to deploy a lot of money with one effort.”

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