High fliers stung by shaky $1bn loan
BANCO DEAR: NZ Superannuation Fund was joined with finance high-fliers in the loan to collapsed Portuguese bank.
An Indian billionaire and a hedge fund run by former Goldman Sachs executives were among coinvestors with the Super Fund in a $1 billion loan to shaky Portuguese bank Banco Espirito Santo.
The Super Fund this morning confirmed legal action had been filed in London and would shortly be filed in Portugal aimed at recovering the money lost after BES collapsed.
New Zealand’s Super Fund had loaned US$150m (NZ$200m) to BES last July as part of a US$784m loan organised by Goldman Sachs through Luxembourg vehicle Oak Finance.
The Bank of Portugal, which bailed out BES last August, ruled in December that Oak’s loan was a related party deal and would not be honoured by the rescued entity.
That decision is being challenged by Oak in the English and Portuguese courts.
According to names listed by the Super Fund, its coinvestors in Oak included several secretive funds based in international tax havens.
One, Karrick, appears to be owned by a trust for the family of Indian steel billionaire Lakshmi Mittal, based in the tax haven of Guernsey.
Another is ANDBank, a private bank based in the tax haven of Andorra owned by the wealthy Cerqueda and Reig families.
Several other coinvestors are specialists in distressed debt involved in long-running litigation against the state of Argentina over a bond default in 2001. They include Avenue Capital Group, Elliott Management Corp, Olifant, FFI Fund and FYI Fund.
Another coinvestor, Silver Point Capital, describes itself as investing in “highly complex situations that require deep analytical resources.”
Founded in 2002 by former Goldman Sachs executives Edward Mule and Robert O’Shea, Silver Point is known for taking large positions in the distressed debt of Lehman Brothers and Icelandic bank Glitnir.
According to investment website Alpha, Mule was at Goldman Sachs for 16 years and headed its distressed debt business alongside O’Shea.
A Danish pension fund established for ex-telephone company employees, TDCPensionskasse, is also among the litigants.
In a statement issued this morning, the Super Fund said the Bank of Portugal’s December decision “was based on incomplete and inaccurate information” and there were no legal grounds for it.
The Oak Finance investors are represented in London by law firm Akin Gump and Quinn Emanuel Urquhart & Sullivan, and in Portugal by PLMJ.
