FRANKFURT/LONDON Nov 25 Shipping finance
provider HSH Nordbank began meeting potential buyers in
London this week ahead of the German lender's planned
privatisation next year, people close to the matter said.
HSH managers will hold further meetings over the next few
days, including with Chinese banks such as Bank of China
as well as buyout firms including Apollo and
Lone Star, the people said.
While the sale of the bank in one piece is the favoured
option for HSH's owners, a divestment in two slices - the core
bank and a portfolio of non-performing loans - is also a
possibility, they added.
HSH and the potential suitors declined to comment or were
not immediately available for comment.
HSH's owners - the northern German states of
Schleswig-Holstein and Hamburg jointly holding 85 percent - have
to privatise the bank by the end of February 2018 and have
mandated Citi to organise the process, which will kick off
in early 2017.
HSH, which said last year that new owners could include
other landesbanks, is due to appoint a separate advisor, the
China has been actively scouting for shipping assets in
China Merchants bank, whose biggest shareholder has been a
driving force in the consolidation of the industry in China,
earlier this year bid for RBS' Greek shipping assets and
for the Baltic Exchange, the global hub for shipping
Separately, China's COSCO, which owns the
world's fourth-largest container shipping fleet, this year
bought a majority of Greece's biggest port Piraeus.
HSH, which had total assets of 90 billion euros and posted a
profit of 160 million euros as of June, sought backing from its
owners after risky assets turned sour in 2008, and it got hit
further by the slump in global trade after the financial crisis.
The EU Commission, HSH and its owners negotiated for years
over a plan to restore HSH to health and avoid future state aid.
Ahead of the privatisation, HSH is selling a 3.2 billion
euro loan portfolio, with a deal for half of that expected this
year and the remainder in early 2017, the sources said.
A listing of HSH on the stock exchange looks unlikely given
the market's weak appetite for banking assets the people said,
pointing to low trading multiples of German peers such as
Deutsche Bank and Commerzbank.
HSH Chief Executive Ermisch said in the summer that he did
not think that the whole bank offered an interesting perspective
for a financial investor.
HSH relies mainly on wholesale funding, benefiting from its
owners' triple A rating. Putting the funding on a new footing is
seen as a challenge for a private equity group, the people said.
Fees and capital requirements linked to mandatory membership
of one of Germany's deposit protection schemes is also seen as a
challenge for a potential private equity owner.
If a sale or listing of HSH fails, its owners would be
forced to wind down the lender with a likely bail-in from
(Additional reporting by Jonathan Saul and Shu Zhang; Editing
by Elaine Hardcastle)