Finance Investment Banking
J.C. Flowers, Grove Take Stake in Hypo
June 24, 2008
By: Josh Seidman, Contributing Correspondent

The offer made by a group of investors consisting of trusts advised by J.C. Flowers & Co. and funds managed by associates of Grove International Partners to obtain a stake in Hypo Real Estate Holdings A.G. has been accepted by Hypo shareholders.

The offer is for a 20.0 percent to 24.9 percent ownership stake in Hypo, at a price of $35 per share.

“Their stake will help to stabilize our shareholder market and their experience will help our company in seeking new opportunities for future expansion and growth,” said a spokesperson from Hypo, a Munich-based public commercial real estate holding company.

The initial offer made by the investment group occurred on May 23, 2008. The Hypo management and supervisory boards rejected the offer due to the fact that they felt the price offered per share didn’t accurately represent the value of the company. However, after an independent screening process conducted by Morgan Stanley, Hypo and its shareholders warmed up to the offer; thus far more than 48.5 million tendered shares representing $1.7 billion have been allocated. This figure represents 24.13 percent of the current outstanding share capital, and it is likely that the percentage of shares to be sold will increase. The investment group believes that the number will reach just over 50 million shares or their maximum intended tender quote of 24.9 percent. The announcement of the specific number of tendered shares will be announced by Thursday.

A spokesperson from HRE expressed that the company was “very happy about J.C. Flowers” for several reasons including their investor’s “knowledge of the German market” and their expressed “interest in wanting to help the company grow organically and internationally.”

J.C. Flowers is a private equity firm devoted exclusively to the financial services sector. In the last five years the company has invested $9 billion worth of equity capital in more than 20 transactions. J.C. Flowers has offices stationed in New York, London, Hamburg and Beijing and has been involved in the German market since 2004.

Their investment partner, Grove International Partners, is a real estate equity firm that has managed a total committed capital of $5 billion since their founding in 1999. Real estate opportunities and platforms that are supported by Grove have been obtaining assets situated in Germany since 2003.

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