The sale of ECS restructuring funds entered its second phase last week with three investors in the running: Davidson Kempner, Bain/Cerberus and Oaktree.
Davidson Kempner, a consortium formed by Bain and Cerberus, and Oaktree. These are the funds that have been selected by the banks to go through to the second phase of the sale of ECS restructuring funds according to sources consulted by the online news agency ECO.
It is already being called the biggest property deal for the year in Portugal because it involves the NAU hotels portfolio, the La Vie shopping centres, among other real estate assets in a transaction that could net €1 billion.
The second phase of the sale process of the ECS restructuring funds entered its second stage last week when investors turned their non-binding offers into firm offers.
However, the competition could see one of two potential buyers getting out of the race even if they do make a hard offer because it is now guaranteed that the banks will take the sale process to the end.
It is said that the investors want the sale to go through regardless of the final value of the transaction but there are doubts that this will happen given the gulf in the amounts currently on the table.
The banks’ reserve price is €1 billion but the bids so far are unlikely to exceed €950 million.
If the banks pull out from the sale because the best offer(s) are less than expected, the international funds which invested some millions of euros in due diligence into ECS will stand to lose.
In other words, the investors will not be prepared to accept the responsibilities of costs without having guarantees that the competition will have a winner at the end.
On the other hand, the final price of the sale is important for the banks, because if the properties are sold below expected price, they deal will represent a loss on their balance books in addition to losses from restructuring funds that have already registered losses for last year because of the pandemic.
Various banks and financial vehicles are exposed to the assets in the ECS fund set up by António de Sousa and Fernando Esmeraldo which are now for sale. Novo Banco, BCP, Caixa Geral de Depósitos, Santander and Oitante.
Founded in 2006, ECS is a leading private equity and restructuring firm focused on the Portuguese market. ECS currently manages four funds directly in Portugal. Its mission is to release the potential of its fund’s companies, partnering with management teams and stakeholders.
By Chris Grame/Essential Business