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News Jul 17, 2015

Shearman & Sterling Advises Hypo Real Estate Holding on Reprivatization and IPO of Deutsche Pfandbriefbank

Shearman & Sterling has advised Hypo Real Estate Holding AG (HRE) in a dual-track process regarding the reprivatization of its subsidiary Deutsche Pfandbriefbank AG (pbb) through an initial public offering (IPO) on the Frankfurt Stock Exchange.

A total of 107,580,245 shares (including 6,589,289 shares in connection with an over-allotment) of HRE's participation were placed on the market at an issue price of €10.75 per share. The gross volume of the placement amounts to approximately €1.156 billion (including approximately €71 million in connection with the over-allotment). The shares were offered for subscription by way of public offers in Germany and Luxembourg and through private placements in other jurisdictions (including the US pursuant to Rule 144A of the U.S. Securities Act of 1933). Based on the placement price, the market capitalization of pbb amounts to approximately €1.446 billion.

Following the IPO, HRE will continue to hold 20 per cent of pbb’s share capital if the greenshoe option granted to the syndicate banks with respect to the over-allotment shares are exercised in full; the shareholding may amount to as much as 24.9 per cent if the greenshoe option is not exercised.

Pbb’s reprivatization was implemented in a dual-track process for the sale of up to 10 per cent of its shares, thereby satisfying a condition imposed by the EU Commission in the summer of 2011. In parallel with the preparations for the IPO, a trade sale process with public invitation to tender was initially also pursued as part of the dual-track process.

Pbb is a specialist bank for commercial real estate finance and public investment finance. The bank's regional focus is on Germany as well as the United Kingdom, France, the Nordic countries and selected countries in Central and Eastern Europe. The bank plays an important role in supplying credit to the real estate sector and supports the public sector with financing for projects and measures designed to enhance public infrastructure.

As part of the reprivatization process, pbb has fully redeemed the German Agency for Financial Market Stabilization’s (FMSA) silent participation of €1 billion and thus repaid a large portion of the financial support received from the Federal Republic of Germany.

HRE, one of Shearman & Sterling’s long-standing clients, is a strategic and financial holding company that does not have any banking operations. All shares in HRE are indirectly held by the Federal Republic of Germany via the FMSA. Shearman & Sterling has advised HRE in connection with the financing of Deutsche Grundbesitz AG’s acquisition by Pirelli, as well as the takeover of Depfa-Bank and its rescue package and restructuring.

The Shearman & Sterling team was led by partner Andreas Löhdefink (Frankfurt-Capital Markets/Mergers & Acquisitions) and included partner Alfred Kossmann (Frankfurt-Mergers & Acquisitions); counsel Ulrich Weidemann (Frankfurt-Capital Markets), Mathias Stöcker (Frankfurt-Public Commercial Law/Antitrust) and Kolja Stehl (London/Frankfurt-Financial Institutions Advisory & Financial Regulatory), and associates Carsten Bernauer (Frankfurt-Capital Markets/Mergers & Acquisitions), Peter Breschendorf, Johanna Isphording, Philipp Jaspers (all Frankfurt-Mergers & Acquisitions), Hartmut Häselbarth (Frankfurt-Public Commercial Law) and Astrid Mayer (Frankfurt-Tax). Partner David Dixter (London-Capital Markets) advised on US capital markets aspects.