GERMANY – HRE squeeze-out formalised; Flowers loses stake

Mareen Goebel
06 October 2009

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JC Flowers lost its stake in ailing Hypo Real Estate bank when the bank's majority owner, government fund Soffin finalised the squeeze-out of the remaining minority investors at yesterday's general meeting.

The resolution for the squeeze-out of minority shareholders was adopted with a close to 95% majority. The shareholders will receive a cash settlement payment of EUR 1.30 per no-par value share.

Not only is this said to be the biggest private equity loss in Germany, but comes after what was probably the worst-timed private equity investment in Germany: JC Flowers led a consortium consisting of Grove International Partners and Shinsei Bank to acquire a 24.9% stake in Hypo Real Estate Holding AG for an estimated EUR 1.127bn in cash. The consortium acquired 50,076,000 shares for €22.50 per share in an all-cash transaction, which represented a premium of 25.3% on the average share price of the previous three months. While the German government has propped up the ailing real estate lender, the bank requires more capital, which the government will only provide under the condition that it owns 100% of the bank.