Apollo in talks to buy Portuguese insurer from BES successor

LISBON Fri Aug 22, 2014 11:14am EDT

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LISBON (Reuters) - U.S.-based Apollo Global Management (APO.N) is in exclusive talks to buy Portuguese insurance company Tranquilidade, part of the troubled web of businesses of the Espirito Santo family, for some 200 million euros ($264.6 million), a source close to the transaction said.

The fund, which expects to seal the deal in the next two weeks, would inject around 140 million euros into the insurance firm to boost its capital, after it suffered a loss of some 150 million in the fallout from the crisis that almost brought down the country's second-largest lender.

The remaining sum would be paid to Novo Banco, which was carved out of Banco Espirito Santo (BES.LS) as part of a state rescue of the lender earlier this month. Novo Banco is now the formal owner of Tranquilidade, which had previously been owned by ESFG, a family holding company.

Tranquilidade was owned by the Espirito Santo family for decades.

A Novo Banco spokesman said the "issue of a Tranquilidade sale has not been closed yet and we do not confirm any details of the transaction".

Apollo has been taking part in an auction of Tranquilidade since early 2014, months before BES and the Espirito Santo family first revealed their severe debt problems.

The source said Apollo was picked because it offered a good price and was prepared to move fast on the deal, while Tranquilidade requires an urgent capital injection to remain afloat.

Apollo expects the deal to be approved by the Portuguese Insurance Institute as the injection will ensure Tranquilidade's solvency is stronger than before the crisis, the source said.

Apollo had previously tried to buy Portugal's largest insurer Caixa Seguros. But in January, the government picked Chinese group Fosun International (0656.HK) over Apollo as the winner in the 1 billion euro privatization of the country's largest insurer with a 26 percent market share.

(1 US dollar = 0.7559 euro)

(Editing by Axel Bugge and David Holmes)

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