News & Analysis

Flowers clinches €2.1bn NIB Capital deal

ABP and PGGM have ended months of speculation regarding NIB Capital by selling the Dutch merchant bank to private equity firm JC Flowers for €2.1bn.

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Following discussions last month, Dutch pension funds ABP and PGGM have agreed to sell merchant bank NIB Capital to New York-based buyout firm JC Flowers for €2.1 billion ($2.6 billion).

Ratings agency Fitch has downgraded NIB Capital’s credit rating as a result of the transaction, suggesting that the JC Flowers consortium would be less likely than the current owners to inject fresh capital or provide liquidity support in a potential crisis.

The acquisition of NIB Capital in 1999 has achieved a healthy return and allowed for successful joint operations in specialist fields like private equity and structured finance.

Else Bos, CIO, PGGM

NIB Capital is focused on the mid-market segment in Northwest Europe and has offices in The Hague, London, Brussels, Frankfurt, Greenwich (US), Singapore and Curaçao, as well as strategic partnerships in New York and Zurich.

ABP and PGGM each hold 50 percent of the shares in NIB Capital. The disposal is expected to be completed by year end.

JC Flowers, which participated in the successful LBO of Japanese bank Shinsei, is believed to have competed against Cerberus Capital Management, GE Capital Corp, Fortis and Rabobank to secure the deal. The firm, run by former Goldman Sachs veteran Christopher Flowers, has a $900 million fund focused solely on investments in financial services businesses.

Financial advisers in the deal were Goldman Sachs for NIB Capital, Morgan Stanley for ABP and PGGM, and ABN AMRO on behalf of JC Flowers.

Following the transaction, Michael Enthoven will remain chairman of the managing board of NIB Capital. The managing board will not change, but a new supervisory board is to be appointed after the formal transfer of shares has been completed.

“The acquisition of NIB Capital in 1999 has achieved a healthy return and allowed for successful joint operations in specialist fields like private equity and structured finance,” said PGGM’s CIO Else Bos in a statement.

NIB Capital sold a large slice of its own portfolio of equity investments to ABP and PGGM in a bid to improve its risk profile in 2002. It then followed up the process in February 2004 when it transferred the ownership of its private equity arm, NIB Capital Private Equity, to management. One of the largest institutional investors in the asset class, NIB Capital Private Equity has since been trading under the name AlpInvest Partners.