Four parties lodge offers for EBS before deadline

THE EBS is on track to have new owners by the end of next month after four interested parties lodged offers for the mutual society before a bid deadline yesterday.

The four bidders are understood to be US private equity firm JC Flowers, London-based private equity house Doughty Hanson which owns TV3, Irish Life and Permanent and Dublin-based investment firm Cardinal Asset Management, led by businessman Nigel McDermott and Nick Corcoran, which is being backed by the Carlyle Group.

The deadline had been extended by two weeks after certain bidders requested more time to examine specific parts of the business. Analysts expect that two bidders will be selected from the four before the preferred bidder is chosen.

The EBS is being advised by a team from NCB Stockbrokers and accountancy firm KPMG. The National Treasury Management Agency is also closely involved with EBS in the process, and has dedicated staff working on the bid.

Any deal which is likely to see the 75-year-old institution become a private institution will require EU approval.

It is envisaged that the new buyer will take a majority shareholding in the business – which could reach 70 per cent – with the Government holding the rest.

The Government has effectively been in control of the building society since May when it took 51 per cent ownership of the EBS ahead of the mutual’s agm.

EBS requires €785 million to meet the Financial Regulator’s new capital rules after a €90 million debt buyback reduced an earlier target of € 875 million.

The Government has injected €350 million – €100 million in cash and €250 million in promissory notes or IOUs – into EBS but the building society still has a shortfall of €435 million.

The Government, which has committed itself to providing the shortfall if private investment is not forthcoming, has strongly indicated that it would welcome private investment.

JC Flowers, which specialises in investments in the financial services sectors, has a history of investing in distressed financial institutions.

Carlyle and JC Flowers were both in the Mallabraca consortium led by Cardinal which had eyed an investment in Bank of Ireland in 2008.

The EBS is expected to transfer about €1 billion in development and property loans into the National Asset Management Agency (Nama).