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U.S. Equity Fund Acquires Troubled German Bank PDF Print E-mail
Friday, 22 August 2008

AP, FRANKFURT, Germany — The German lender IKB Deutsche Industriebank, which has been badly hit by the subprime mortgage crisis in the United States, will be sold to the private equity firm Lone Star Funds, the German company's biggest shareholder said Thursday.

The largest shareholder, Germany's state-owned KfW development bank, did not give the terms of its deal to sell 90.8 percent of IKB to Lone Star.
 
KfW had been shopping IKB around for nearly a year and its governing council agreed late Wednesday that Lone Star would be the right buyer.
 
Lone Star agreed last month to buy asset-backed securities with a nominal value of $30.6 billion for $6.7 billion from the Merrill Lynch & Company.
 
Lone Star, founded in 1995, currently manages more than $13 billion.
 
The value of asset-backed securities — especially those backed by mortgages — have plummeted in the last year as the underlying loans have increasingly defaulted. Those losses have forced investment banks like Merrill Lynch to raise new capital to offset the losses.
 
IKB's problems sprang from its Rhineland Funding investment vehicle's apparent inability to cover its funding needs because of exposure to subprime loans.
 
That prompted a series of rescue packages for the bank that totaled more than $11.8 billion.
 
IKB lends to small and medium-sized German companies.

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