Two leading Greek banks Alpha Bank and Eurobank together with US private equity group KKR Credit today announced a binding agreement by which the Greek banks agree to assign the management of credit and equity exposures to a selected number of Greek companies into a platform managed by Pillarstone.
Subject to final Board approval, the European Bank for Reconstruction and Development (EBRD) is considering co-investing in partnership with KKR and the banks.
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Alpha Bank, led by is one of the largest banking and financial groups in Greece, with international presence. Eurobank group one of the four pillars of the banking system in Greece with total assets of €72.9 billion and international presence.
KKR an American multinational private equity firm, led by Henry Kravis and George R. Roberts with total assets of $51.427 billion (2013)
The platform will provide:
fresh long-term capital and operational expertise to large Greek corporate borrowers helping them stabilize, recover and grow for the benefit of all stakeholders. The Greek banks will share in the upside as the businesses’ performance recovers.
This is a pioneering platform, both in terms of scope and scale, and also has the flexibility to allow other lenders to participate by contributing loan portfolios or adding existing exposures to a specific company to those of the other banks.
Pillarstone, a KKR-driven initiative aimed at tackling Europe’s bad loans problem, is also involved in the project. FT reports that Pillarstone is already active in Italy, where it has relieved one lender of some distressed shipping loans and taken on equity and credit positions from Intesa Sanpaolo and UniCredit.
Noel Edison, EBRD Director for Insurance and Financial Services, said: “The successful recapitalisation of the Greek banks at the end of 2015 was an essential step towards financial stability. The next important milestones include a more effective management of underperforming exposures. The platform will provide corporates in financial difficulty with new financing and turn-around operational expertise, which are prerequisites to unlocking the inter-creditor impasse and supporting growth in the real economy.”
John Davison, CEO of Pillarstone, said: “The platform, that Pillarstone manages, offers Greek companies new financial resources and operating support to enable them to deliver on their potential. It is a unique approach based on a collaborative model that benefits a wide range of stakeholders including the banks.”
The transaction is subject to the completion of certain conditions precedent.
HSBC Bank plc acted as the coordinator and structuring adviser of the transaction for Alpha Bank and along with Mediobanca for Eurobank.
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