GERMANY - JC Flowers-backed Hypo prepares for profit plunge

JC Flowers invested in Hypo in April 2008, leading a consortium that acquired a 24.9% stake in the listed bank in a deal worth in excess of EUR 1.1bn. The transaction saw the US-based buyout house gain a 14% interest to become the largest private shareholder.

In the following year as the market continued to nose-dive the bank was forced to seek state aid, receiving a total of more than EUR 100bn in refinancing guarentees without which it almost certainly would have collapsed. Subsequently, in May this year the German Government sought to nationalise Hypo by launching a EUR 1.31 per share takeover offer. JC Flowers rejected the approach claiming it did not offer sufficient value.

But with the market failing to improve the Government was again forced to step in recently, with state-backed investor Soffin acquiring 90% control of the bank as part of a capital increase. A restructuring is currently under way and a full squeeze out now appears likely.

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