Cerberus, JC Flowers Agree to Buy HSH Nordbank for $1.2 BillionBy and
Cerberus has been snapping up German lenders in past year
HSH CEO Stefan Ermisch has reduced non-performing loans
A group of investors led by Cerberus Capital Management agreed to acquire regional lender HSH Nordbank AG from two German states for about 1 billion euros ($1.2 billion), at least the fifth purchase of a German bank in the past year that involved the U.S. private-equity firm.
The group of buyers, which includes J.C. Flowers & Co. as well as Austrian lender Bawag, GoldenTree Asset Management and Centaurus Capital LP, will acquire 94.9 percent of the shares, according to a statement posted Wednesday on the website of the state of Hamburg.
HSH is latest piece in the growing puzzle of Cerberus’s German bank deals, which include stakes in Deutsche Bank AG and Commerzbank AG, the two largest in the country. Bawag, which Cerberus and GoldenTree control after taking it public last year, bought Suedwestbank AG, a regional bank in Germany’s prosperous southwest, and agreed to purchase mortgage lender Deutscher Ring Bausparkasse.
For HSH, the sale ends years of uncertainty that started when European Union in 2015 ordered the federal states of Hamburg and Schleswig-Holstein to sell the bank. The states had poured billions into HSH since 2009, when it buckled under investments in the U.S. subprime mortgage market and woes in the shipping industry.
The sale of the bank is contingent on the completion of guarantees worth 10 billion euros that the two states had given at the time, according to the statement. The price may be lower if less than the full sum is being paid out.
When the sales process was kicked off about a year ago, the bank appeared closer to a wind-down because of lukewarm interest from potential buyers. Since then, Chief Executive Officer Stefan Ermisch -- with the help of UBS Group AG bankers around Holger Krause -- cut troubled loans on HSH’s books.
By late October, Cerberus and rival investor Apollo Global Management each offered to pay more 200 million euros. A third bidder, a little-known private equity firm named Socrates Capital that hadn’t yet raised any money for such a deal, signaled it could pay more than 1.5 billion euros, according to people familiar with the matter. The bank’s owners and their advisers, a team of Citigroup Inc. bankers around Frank Vogel, subsequently pushed Cerberus and Apollo to raise their offers.