IL&P in talks with banks on underwriting rights offering
Irish Life & Permanent, the country's biggest life assurer and mortgage lender, is in talks to hire four banks, including Citigroup and Deutsche Bank, to underwrite a rights offering.
The lender is also in talks with Royal Bank of Scotland Group and Ireland's Davy to manage the share sale, which would depend on the bank succeeding in its bid to merge a unit with EBS.
Irish Life is seeking to separate Permanent TSB, its banking unit, and combine the division with EBS. To separate the unit, Irish Life needs to provide Permanent with about €925m of additional capital.
Irish Life is pressing the government to provide EBS with a €785m capital injection before the merger, according to three people with direct knowledge of the matter.
"We've indicated that we will undertake a rights issue in the event of engaging in a transaction involving EBS," Irish Life spokesman Ray Gordon said.
"Naturally, we have undertaken relevant, detailed preparations for such an issue which are now at an advanced stage."
He declined to comment on which underwriters the bank is working with.
EBS is seeking to raise the €785m to meet capital requirements set by the country's financial regulator after racking up losses on commercial real estate.
The government has already injected €350m of capital into EBS and has committed to providing the remainder of what's needed if it does not secure outside investment.
Spokesmen for Citigroup, Deutsche Bank, Davy and RBS declined to comment.
A group including WL Ross & Co, the New York-based private equity firm, Carlyle Group, the Washington-based leveraged buyout firm, and Dublin-based Cardinal Asset Management is also among bidders looking to take control of EBS, Wilbur Ross, chief executive officer of WL Ross, said.
JC Flowers & Co, the firm started by former Goldman Sachs bankers Christopher Flowers, and Doughty Hanson & Co, are also bidding separately for EBS.
The list of four bidders will be narrowed to Irish Life and one leveraged buyout firm by the end of this week. (Bloomberg)