Irish

Wednesday 20 August 2014

Mystery buyer lined up for IL&P stake in NAMA to keep debt off books

Donal O'Donovan

Published 24/04/2012 | 05:00

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Finance Minister Michael Noonan

THE Government has lined up a mystery buyer for a €17m stake in NAMA owned by nationalised lender Irish Life & Permanent's (IL&P).

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A deal is necessary to keep NAMA's €30bn of debt off the official deficit figures, which could damage the country's debt profile as far as international agencies are concerned.

IL&P said it has agreed to sell its stake in the scheme, originally set up to keep NAMA's debt off the State's balance sheet, to a "private investor."

Sources said the deal was expected to be "neutral" for IL&P -- meaning the stake will be sold at around the €17m the bank paid for its investment.

The Government yesterday refused to name the new NAMA shareholder for the present, citing commercial sensitivity.

Back in 2010, when NAMA was set up, its borrowings had threatened to damage the country's credit profile, if they were considered part of the national debt by international agencies.

To get around that risk a so-called "special purpose vehicle" (SPV) was set up to bring in private investors to hold a majority stake in the agency.

Three investors, AIB, Bank of Ireland and Irish Life & Permanent each took a 17pc share of the NAMA SPV in exchange for a €17m investment.

Dividend

They bought into a highly unusual investment. If NAMA loses money over its life, the three investments will be wiped out. If it makes a profit they stand to make relatively little.

The SPV investors could be paid a 10pc profit on their original investment if NAMA is wound up profitably. In addition the investors can also receive a discretionary dividend -- last year's was 10pc, for example.

Nationalised lender AIB's stake has already been sold to South African investor Prestige.

Yesterday Eurostat, the EU statistics agency, expressed a reservation about the ownership of the IL&P stake, keeping up pressure to get a sale closed.

"The effect of the sale will mean that NAMA will continue to have absolutely no general government impact," Finance Minister Michael Noonan said.

He added that provisional figures show that NAMA posted a profit of €200m in 2011.

Irish Independent

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