May 18, 2018 / 11:56 AM / 3 months ago

Germany's RAG Foundation takes stake in property lender Pfandbriefbank

FRANKFURT/DUESSELDORF (Reuters) - German public sector trust the RAG Foundation said it bought a 4.5 percent stake in property lender Deutsche Pfandbriefbank (PBBG.DE) from Hypo Real Estate (HRE) in a placement this week.

State-owned HRE, which was bailed out a decade ago by the German government and then nationalized, sold most of its remaining 20 percent stake in Pfandbriefbank (PBB) on Tuesday.

“The bank is strategically well positioned, and its low-risk business model and good dividend yield offer an attractive risk-return profile,” RAG finance chief Helmut Linssen told Reuters on Friday.

HRE said on Tuesday that a long-term institutional German investor had acquired 4.5 percent of PBB’s stock in the placement but did not name the investor.

The investment will help RAG Foundation become less dependent on the chemicals sector, where its biggest holding is a roughly two-thirds stake in German chemicals maker Evonik (EVKn.DE).

Linssen said he would not rule out further investments in the financial sector if opportunities arose but declined to say whether RAG could increase its stake in PBB.

RAG has its roots in German hard-coal mining company Ruhrkohle AG. Its main purpose is to finance the future cost of keeping Germany’s abandoned coal mines from caving in.

Reporting by Maria Sheahan and Matthias Inverardi; Editing by Tom Sims and Susan Fenton

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