Sale of Hypo Alpe Adria completed

By bne IntelliNews July 20, 2015

bne IntelliNews -


US investment fund Advent International and the European Bank for Reconstruction and Development (EBRD) have completed the acquisition of the Balkan operations of Hypo Alpe Adria, the insolvent Austrian bank taken over by the government in 2009.  

Heta Asset Resolution, the state bad bank vehicle that took over Hypo Alpe-Adria-Bank International, said in a brief statement on July 17 that the last condition for wrapping up the Hypo Group Alpe Adria (HGAA) deal had been fulfilled, after the European Central Bank and the Financial Market Authority approved the intended extension of the banking license. “The closing of the sale has hence been successfully completed today,” the statement said.

It added that the new sole shareholder of Hypo Alpe Adria is Luxemburg-registered AI Lake, which is jointly owned by Advent and the EBRD.

The parties involved in the deal signed the sales contract in December. Under its terms, Advent acquired 80% of HGAA and the EBRD the remaining 20%. The agreed purchase price was set at up to €200mn, depending on 2014 and 2015 earnings, with a minimum purchase price of €50mn. Advent has also pledged to provide Heta with additional financial gains in the future via an upside sharing mechanism.

As part of the deal, the buyer and seller have set certain rules to allow the repayment schedule for existing credit lines worth €2.2bn, half of which will be under the form of secured credit lines.

Reuters reported on July 17 that according to Advent, the state guarantees for the €2.2bn portfolio remain in place.

The acquisition of HGAA was first agreed in October, shortly after the troubled Austrian lender approved the spinoff of its Balkan units into a separate legal entity, Hypo SEE Holding, which was later renamed Hypo Group Alpe Adria.

HGAA owns a network of subsidiary banks and leasing companies in Bosnia and Herzegovina, Croatia, Montenegro, Serbia and Slovenia, with total assets of €8.4bn. The network has 245 branches and serves 1.15mn customers across the Balkans.

Last year, HGAA reported an after-tax loss of €97.4mn, which it said was primarily attributable to provisions on assets and receivables totalling €133.5mn (down from €353.7mn in 2013). The 2014 financial result was also impacted by one-off items such as restrictions on new business imposed by the European Commission.

However, HGAA’s non-performing loans ratio dropped to 12.2% at end-2014 after the bank sold some non-performing retail loans in preparation for its sale. Its core capital ratio stood at 20.1% at the end of last year.

Following the spinoff of the SEE operations, the remainder of Hypo was turned into a “bad bank” and renamed Heta Asset Resolution.

Hypo, based in Carinthia,  failed after a huge and risky expansion into the Balkans. Austria took it over in 2009 and has been working on the restructuring and rehabiliting of the whole group and on the sale of its South Eastern Europe assets ever since. The Austrian government had to complete the sale of Hypo's SEE business by mid-2015 in return for European Commission approval of the state aid for the troubled banking group.

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