IRISH LOANS SELL-OFF COULD BE GENESIS OF THIRD BANKING FORCE - The mass sell-off of loans books by Irish lenders could be used by a US private equity house to create the kernel of a third banking force, according to one of the country's leading corporate finance executives. So far this year €27 billion of Irish business loans, property loans and residential mortgages have been sold by banks, according to new research from PWC. It compares to €5 billion of loans sold by banks in Germany, and €3 billion of UK loans sold in the same period - despite the much bigger size of those economies. Across all of Europe - including Ireland - the total is €43 billion. The scale of activity is reshaping the Irish banking landscape, PWC's head of corporate finance Aiden Walsh told the Irish Independent. Just a handful of buyers dominate the market for Irish loan assets. US private equity firm Lone Star is the biggest single loan acquirer, while Blackstone, Deutsche Bank and CarVal Investors are also active. Loan sales could ultimately lead to a situation where a big fund accumulates a position in the market so big that the natural next step is to become a loan originator in its own right, according to Aiden Walsh. That would mean an investor creating a new entity by extracting assets from the likes of Permanent TSB and Ulster Bank and other lenders rather than investing into an existing lender to create a "third banking force".
HOTEL SALES SOAR 175% SO FAR THIS YEAR - The hotel market saw a huge increase in activity in the first half of this year, with almost three times as much spent on property sales, writes the Irish Examiner. Commercial property adviser CBRE yesterday released data which showed hotel property sales rose 175% in the first six months of 2014 compared with the same period last year. The spend totalled €132m - up from €48m in the opening half of 2013. Some 27 hotel property sales have been concluded this year. There were 13 at this stage last year. According to CBRE, an array of private investors and hotel operators have been active in the market over the first six months of the year, with local purchasers accounting for 75% of the hotel spend. Purchasers from the US, UK, and China accounted for 21% of the spend. Notable transactions include the sale of the Hilton Hotel at Charlemont Place in Dublin for €30m; Doonbeg hotel and golf resort, Co Clare, for €15m; and the Dublin Airport Clarion Hotel which also sold for €15m.
EX-QUINN EXECUTIVES IN GROUP BIDDING FOR MANUFACTURING UNITS - A consortium of former senior executives in the Quinn Group and a group of northwest businessmen have teamed up with Endless LLP, a UK private equity house, to buy two key units of the manufacturing arm of the business, now called the Aventas Group. Endless and its local partners called the Quinn Business Retention Company (QBRC) are understood to have made an indicative offer of between €80 million and €90 million for the former Quinn Group packaging and construction supplies divisions. The two businesses employ 650 people in Derrlylin /Ballyconnell area. Endless, an experienced private equity investor, is understood to be prepared to invest tens of millions in expanding the business if successful, says the Irish Times. A memorandum of understanding has been signed between QBRC and Aventas and a period of due diligence is due to begin, with a deal not expected to be completed until the third or fourth quarter of this year. A sale will require the approval of Aventas’s dozens of investor shareholders, some of who are believed to value the company at more than QBRC/Endless initial offer. Aventas will continue to operate the former Quinn Group’s glass business and plastics and radiators divisions. Former Quinn Group chief executive Liam McCaffrey is expected to lead the two units, which will continue to trade under the Quinn brand, if the bid is successful.
SHORT SELLING DROPS TO LOWEST LEVEL SINCE LEHMAN - Hedge funds have sharply scaled back their bearish bets that the value of stocks is about to fall, with the proportion of shares earmarked for short selling at its lowest level since before the financial crisis despite warnings of renewed market exuberance. The percentage of stocks that have been borrowed by short sellers - who try to profit from a company’s share price falling - has dropped to the lowest level in the US, UK and the rest of Europe since the years before the collapse of Lehman Brothers, according to data compiled for the Financial Times by Markit. The fall in short selling comes as Wall Street and markets in Europe trade at near record and multiyear highs, indicating that while some high profile hedge fund managers have warned of excessive market euphoria the industry is still unwilling to bet against the rally. The amount of so-called short interest in the benchmark US S&P 500 index is hovering around 2% of total shares in the index, close to the lowest level since Markit began collecting the data in 2006. In the European Stoxx 600 index, the level is similar at just over 2%, while short interest in the UK FTSE All-Share index stands at less than 1%. This compares with sharply elevated levels in the years preceding the credit crisis, with the data showing short interest in the US in 2007 hitting a high of 5.5%. The Markit data does not take into account all changes in stock indices over the period.