BIDDERS get a first glimpse of what assets are left behind by collapsed Anglo Irish Bank today as its loan book is opened up.
Liquidators are opening up the €3.5bn pool of business loans for inspection.
It is understood that liquidators, KPMG, have until the end of the year to sell the assets, or transfer them to the National Asset Management Agency (NAMA), the state-owned "bad bank" which is already one of the biggest property groups in the world.
Anglo Irish, known as IBRC in its final years, was put into liquidation in February as part of a deal to release Dublin from a commitment to quickly pay off a €29bn debt to the bank. At that time the bank had assets worth €22bn.
Bidders will have four weeks to study detailed financial information on the bank's business loans before submitting indicative bids for this portfolio, those will then be assessed and a second round will be pursued if appropriate, sources told Reuters.
There are four portfolios of loans on offer, including €7.8bn of UK commercial property loans, a €1.8bn euro Irish residential mortgage book and a €9.3bn commercial real estate book which investors will likely get a look at later in September.
But the most interesting portfolio for private equity investors, said Gavin Loughrey, partner at Alchemy Partners LLP, is the first that investors will get a look at, the so-called 'Project Evergreen' pool of €3.5bn of business loans, which includes a 50pc stake in Dublin department store Arnotts and Fields Jewellers.
"Evergreen is a seminal moment, if that trades, that's activity in the marketplace and activity breeds activity," said Loughrey, speaking at an M&A event in Dublin on Thursday.
Evergreen is expected to attract more than 100 potential buyers to the data room, a source familiar with the matter told Reuters.
However the government's chosen valuation method may put some buyers off, some market sources said. The sales are being valued against a 'discount rate' of 4.5pc, which implies a rate of return of 4.5pc on cash flows.
The discount rate converts the amount a buyer will earn from an asset in the future into the amount the asset is worth in today's money. The higher the discount rate, the lower the value of the asset now.
Private equity investors require a far higher rate of return, usually in double-digits.
An independent valuation of the assets is being carried out by UBS and under the sale process assets will only be sold if bids exceed their valuation. If they do not, the assets will be transferred to NAMA at the valuation given by UBS.
Any difference between the sale value and the values the assets were held at in IBRC's books will be closely watched in Ireland, since the profit or loss will be interpreted as an indication of whether IBRC's abrupt death was a financially prudent decision.
"These businesses have already had three years liquidity issues since 2009 and they are crying out for a right-sized restructuring from someone with a fresh pair of eyes, fresh capital and a growth objective," said Gordon Brothers' Pearce, whose firm bought Clerys Department store in Dublin last year.
"If they end up in NAMA, they are going to be there for 12 months at a minimum and from an Irish taxpayers perspective, any of those assets that go into NAMA, I see that as potentially value destructive because they are not going to receive the support they need," he added.