US private equity firm Lone Star is not giving up on buying Bank of Cyprus, with senior officials in Nicosia to negotiate with stakeholders.
Despite seeing three cash offers rejected by the island’s biggest lender and scepticism from financial authorities, the fund appears determined to push for a deal to acquire the bank.
Quoting sources close to procedures, news site Stockwatch said that Lone Star representatives are trying to convince authorities that their investment strategy in the domestic banking system is not an opportunistic venture.
According to Stockwatch, Lone Star cited their participation in the share capital of two major European banking institutions, German IKB Deutsche Industriebank AG and Portuguese Novo Banco SA.
Lone Star acquired the majority of the shares in both financial institutions when the banks had been placed under a restructuring regime.
Stakeholders told Lone Star that the acquisition of a banking institution primarily concerns the members of its management and, by extension, its shareholders.
It was pointed out to the American investment fund that executive and legislative power show respect for the supervisory authorities of domestic banks.
In this case, as they indicated, the competent supervisor is the Central Bank and the ECB.
Within two months, the American fund submitted three proposals for acquiring the Bank of Cyprus, which were unanimously rejected by the bank’s board.
Lone Star, which invests in real estate, equity, credit, and other financial assets globally, said it offered €1.51 per share for the bank, meaning the takeover would cost €727.25 mln.
Shares in the bank, up about 12% this year, were worth €1.25 at the time of the previous offer.
On Wednesday, the BoC share was trading at €1.33 on the CSE.
Lone Star’s first offer was made at the beginning of May, with a price of €1.25 and the second at €1.38 per share.
Bank of Cyprus currently has a market cap of €524.3 mln, according to financial market data provider Refinitiv, owned by the London Stock Exchange.
According to Irish regulations, Lone Star has until 30 September to file a new offer, as Bank of Cyprus Holdings Plc was incorporated in Ireland in 2016 to list on the London Stock Exchange.
Meanwhile, the Ministry of Finance is preparing to submit a bill to the Parliament to establish a framework for controlling foreign direct investments.
This law, according to Stockwatch, incorporates into national law the relevant regulation issued by the EU concerning the control of foreign direct investments within member states.
The majority of EU member states have implemented this law since 2019.
It gives governments the right to assess whether a direct foreign investment is likely to affect the security or public order of the Republic of Cyprus and whether the company in which the direct foreign investment is planned operates in sensitive sectors, including systemic credit institutions.