Lone Star and Elliott lead PTSB sale field
US-BASED buyout group Lone Star and US hedge fund Elliott Management are expected to submit final bids today for Permanent TSB’s €2.2bn portfolio of soured home loans.
As the Irish Independent revealed earlier this month, Cerberus, a prolific acquirer of distressed debt after the crash, quit the race recently, raising questions about the firm’s future appetite for non-performing residential mortgages.
It is unclear whether Oaktree and Goldman Sachs remain in contention for Project Glas, as the loan sale has been dubbed, but sources said the field has narrowed drastically over the past few weeks.
AIB’s recent Project Redwood deal attracted just three bidders in the final round and it is understood Goldman Sachs tabled a far lower offer for the distressed commercial loans than rivals Lone Star and the eventual purchaser, Cerberus.
Lone Star is also viewed as a strong contender for this latest sale. The surprise bidder however, is Elliott, an activist hedge fund, founded by US billionaire, Paul Singer, which pitched hard for Danske Bank’s €1.8bn portfolio and recently stated it intends to ramp up its operations in Europe.
Sources said Elliott has likely partnered with a large loan-servicing firm like Pepper to advance to the last round of bidding.
The winner however may encounter intense public scrutiny.
State-backed PTSB came under heavy criticism in February when it first unveiled the mega home loan sale, prompting CEO Jeremy Masding to insist the bank had little choice but to purse a loan sale.
At an Oireachtas Finance Committee hearing, he claimed the lender faces mounting regulatory pressure to reduce the bank’s bad-debt ratio from 26pc at the end of 2017 to the EU average of about 5pc.
Despite a political backlash at the decision to flog owner-occupier loans to so-called vulture funds – in the largest sale of its kind by a bailed-out Irish bank, Mr Masding argued it is “very much in the State’s interest that the bank manages its non-performing loans down to a tolerable level”.
PTSB is expected to select a buyer by next month.
The sale of Project Glas, which is split into two separate portfolios; Project Nepal and Project Tibet, with the former housing soured buy-to-let loans and the latter made up of distressed owner-occupier mortgages, will mark a key turning point in the bank’s efforts to cleanse its balance sheet.
Speculation about the final bidders comes as the bank announced the appointment of Ruth Wandhöfer to the board.
Ms Wandhöfer, who worked at Citi as a managing director will take up her position on October 30.