Lone Star is emerging as the likely bidder for Portuguese 'good bank' Novo Banco, which was created to incorporate the assets and liabilities of failed bank Banco Espirito Santo (BES) in 2014.
Bank of Portugal released a statement describing Lone Star as the 'best placed entity' to 'successfully complete the negotiation process' for the bank, and said it had invited the US-based private equity player to conduct further talks.
Lone Star, which invests in distressed assets around the globe, is understood to have tabled a €770 mln proposal, which would be accompanied by a subsequent injection of the same amount of capital.
Its bid exceeded that of its main rival, an alliance between two other US private equity funds Apollo and Centerbridge, and was preferred to the offer made by Chinese player Minsheng which sources say lacked the necessary guarantees.
However Bank of Portugal said that the next stage of negotiations would not preclude other bidders from improving their offers.
The Portuguese government will have the final ruling on the sale, with local media noting that state finance minister Mario Centeno has suggested the nationalisation of Novo Banco instead.
