Lone Star looking at €5Bn valuation for Novobanco

 In Asset and Fund Management, Banks, Funds, News, Novo Banco

The US vulture fund Lone Star, which has a 75% share of the capital of Portuguese bank Novobanco, is looking to get a valuation of €5Bn for the financial institution.

This figure is the starting point for eventual negotiations with national and overseas investors that are jostling to position themselves in a race to buy the bank.

According to business daily Negócios the French banking group BPCE is said to be interested in acquiring Novobanco which also has the financial institutions Banque Populaire, Caisse d’Epargne, Natixis Corporate & Investment Banking, Natixis Investment Managers, Banque Palatine, Casden and Crédit Coopératif et Oney.

Interest in acquiring the bank led by Mark Bourke has increased through January although the favoured path for Lone Star remains a floatation on the stock market through an IPO.

Lone Star has also not ruled out the possibility of selling a 20-30% stake in the bank’s capital and make €1Bn in the process.
Lone Star invested €1Bn in the bank in 2017 and aims to get a handsome return after Novobanco has since been structured, modernised, capitalised, and cleared of Non-Performing Loans. (NPLs).

After years of being propped up by a Resolution Fund with a capitalisation of nearly €5Bn and the Portuguese taxpayer to the tune of up to anywhere between €8-€11Bn, Novobanco closed the first nine months of 2024 with a healthy €610.4 million profit and will be able to pay a dividend estimated at €325 million to the Portuguese State which, along with the Portuguese banking sector (the latter with €635 million), supported it for four years from its inception in August 2014.

Shortly after being set up, it had around €72.4Bn in assets and a solvency ratio of 9.2% – above the 7% required by the Bank of Portugal or the 8% imposed by the European Central Bank.

In June 2022 and again in April 2023 the ratings agency Moody’s raised the bank’s preferred notes rating by 5 notches to Ba3 with a positive outlook.

In 2023, Novobanco was awarded ‘Bank of the Year in Portugal’ by the magazine The Banker, a Financial Times magazine.

In the meantime, it was announced this week that Novobanco had issued €500 million in five-year covered bonds.
The operation announced on Tuesday saw demand of €3.8Bn – six times the offer.

The money raised will be used by the bank to diversify and enhance its sources of financing says the bank.