The stock price of Banco Espirito Santo SA (ELI:BES) climbed 14% to €0.478 in Lisbon today after receiving investments from D.E. Shaw & Co. and Goldman Sachs Group Inc (NYSE:GS).
Banco Espirito Santo SA (ELI:BES) disclosed that its main holding company, Espirito Santo International missed some debt payments, and it is under investigation by authorities in Luxembourg due to accounting irregularities.
For the first quarter of 2022, the Voss Value Fund returned -5.5% net of fees and expenses compared to a -7.5% total return for the Russell 2000 and a -4.6% total return for the S&P 500. According to a copy of the firm’s first-quarter letter to investors, a copy of which ValueWalk has been able Read More
Since the disclosure of the accounting irregularities and debt troubles of its main holding company, the shares of Banco Espirito Santo SA (ELI:BES) declined as investors became concern regarding its impact to the sovereign debt stability of Portugal.
Banco Espirito Santo raises capital
The central bank of Portugal advised Banco Espirito Santo SA (ELI:BES) to raise funds to reinforce its capital. The bank first announced the investment from Seth Klarman’s Baupost Group, which acquired 2.27% stake.
Yesterday, Banco Espirito Santo SA (ELI:BES) received additional investments from D.E. Shaw & Co., a hedge fund in New York that acquired 2.7% stake while Goldman Sachs Group Inc (NYSE:GS) acquired 2.8% stake.
According to Goldman Sachs Group Inc (NYSE:GS), it “entered into positions with Banco Espirito Santo by virtue of its facilitation of client transactions.”
Commenting on the investments, Juan Dieste, a trader at Orey iTrade in Lisbon told Bloomberg, “This purchase passes on some security to the market and can open the door for other institutional investors.”
Bank of Portugal Governor Carlos Costa previously stated that Banco Espirito Santo SA (ELI:BES) will probably raise private funds to improve capital as investors, and investment banks indicate their interest on the lender. He also reassured depositors and investors that the second-largest bank in Portugal will survive potential losses from Grupo Espirito Santo, which indirectly controls 20% stake.
Earlier this month, a spokesperson for the Bank of Portugal was quoted by the Wall Street Journal, who said, “The solvency situation of [Banco Espírito Santo] is solid and has been significantly reinforced with the recent capital increase.”
Banco Espirito Santo hired Deutsche Bank to provide advice
Banco Espirito Santo SA (ELI:BES) hired Deutsche Bank AG (NYSE:DB) (ETR:DBK) as financial advisor to help strengthen its balance sheet.