JC Flowers buys quarter of Hypo for €1.13bn

The private equity group will take a stake in the German property lender following its admission in January that it was more exposed to the global credit crisis than previously thought.

A group of investors coordinated by J.C. Flowers & Company has submitted a proposal to acquire a 24.9 percent stake in German property lender Hypo Real Estate. Hypo has in return “welcomed in principal” the offer.

The other investors in the group include Shinsei Bank and Grove International Partners.

The offer, at €22.50 a share, is 21.8 percent higher than the publicly-traded company’s shares closed on Tuesday. The total offer would be €1.13 billion ($1.8 billion)

Hypo’s shares took a fall in January when it revealed a sharp fall in annual profits and higher than expected exposure to the global credit crisis. Since then the company has recovered somewhat but shares are still trading below their 52-week high of more than €52.

Hypo said its management board will comment on the offer “after reviewing the offer document, which still has to be drawn up.''
Hypo Real Estate spun out of German Bank HVB in 2003. HVB was later bought by Italy’s Unicredito. Last year Hypo acquired German lender Depfa bank for €5.7 billion, aiming to expand its financing capabilities for infrastructure and reduce its exposure to commercial property.