KKR has acquired a portfolio of shipping loans valued at $1.5 billion from German bank Norddeutsche Landesbank (NORD/LB).
The loans will be placed in a vehicle jointly managed with a sovereign wealth fund, the identity of which has not been named publicly. The vehicle is targeting the management of a number of ship loans as banks reduce their exposure to the sector as the shipping crisis continues to bite.
The purchased portfolio contains around 100 loans. The German bank plans to reduce its exposure to the shipping industry from €18 billion to between €12 billion to €14 billion over the next 12 months. A spokesman for the bank declined to comment on any future involvement with KKR’s vehicle.
Johannes Huth, head of KKR Europe, Africa and Middle East, said: “This transaction is in line with KKR’s focus on investing in and managing banks’ non-core and under-performing assets.”
Gunter Dunkel, chairman of the management board of NORD/LB, said: “The agreement is a significant milestone for the bank as it continues to effectively manage its balance sheet through the ongoing shipping crisis.”
The agreement is expected to be closed by the fourth quarter.
Over the year, there have been numerous reports on the struggling shipping industry. An imbalance in the number of ships purchased by shipping companies and the lack of demand for the goods delivered has meant many firms are suffering from a glut.
In July, Reuters reported that Germany’s largest bank, Deutsche Bank, was looking to offload a portfolio of shipping loans valued at $1 billion. It followed reports of the European Central Bank looking to conduct a review of the banks’ lending practices in the sector, prompting fears of an increase in capital requirements.