Fortune concludes €102m restructuring

A Germany- and Dubai-listed investment firm has capped off a torrid 2008 with a restructuring agreement that will ‘secure the company’s future’.

Fortune Management, a Frankfurt- and Dubai-listed private equity fund, has finalised a restructuring deal first outlined in June 2008.

The firm has effectively surrendered control of two of its three portfolio assets – a wealth management platform and a biofuel concern – to its creditors in exchange for €102 million worth of bonds and loan notes.

Fortune had hoped to sell the two assets during 2008, but had been unsuccessful in finding buyers.

“With this we are able to conclude a restructuring agreement despite the current difficult general environment which secures the company’s future,” said René Müller, chief executive of Fortune Management.

The agreement follows a testing year for Fortune, which originally raised €50 million via an initial public offering in 2004 to invest in wealth management companies.

Fortune began a large-scale restructuring of the firm’s assets – which would involve the sale of the asset management business, Fortune Wealth Management, and the Biodiesel business, Gate Group – at the beginning of 2008.

Gate Group, a Germany- and Austria-based biofuel platform in which Fortune invested in 2005, was hit hard by successive tax hikes on biofuels by the German government. Gate’s Austrian subsidiary, Biodiesel Enns, filed for insolvency in April 2008, while a buyer was sought in vain for the remainder of the business.

Biofuel: tax hikes have hit the industry hard in Germany

Fortune Wealth Management Group, which had grown via a series of acquisitions to have CHF1.5 billion under management in 2007, suffered a reduction in assets under management due to both the departure of a client relationship team and the escalating financial crisis.

A potential buyer for the wealth management business signed a purchase agreement with Fortune in June, but finally walked away from the deal. Fortune subsequently managed to sell part of the business, that which was originally known as Van Daalen, back to its management, but the majority remained unsold.

Fortune’s third portfolio company, a subsidiary private equity firm based in Abu Dhabi named Fortune Super Equity Management, is unaffected by the restructuring. Fortune owns 10 percent of the company, which was established two years ago, while the remaining 90 percent is owned by the Abu Dhabi royal family.

FSEM, which will use the royal family’s money to make investments – most likely without leverage – has yet to make an acquisition. The closest it has come so far was an unsuccessful take-private bid for Oslo-listed offshore drilling company Scorpion in April 2008.  

FSEM is expected to appoint a chairman next week, after Sheikh Nasser bin Zayed al Nahyan, who previous filled the position, died in a helicopter accident in June last year.

Law firm Taylor Wessing advised Fortune Management on the restructuring.