THERE HAVE BEEN calls for the Controller and Auditor General to investigate the sale of a Nama portfolio after it emerged it was not put on the open market.
The portfolio, Project Tolka, sold for €455 million.
However, Fianna Fáil’s Michael McGrath has described one aspect of the sales process as “peculiar” due to the debtors and Nama selecting three potential bidders for the portfolio.
McGrath said the sales process could not be described as fully open and competitive, adding that it is difficult to understand the reason why such a selective approach was taken by Nama in relation to potential bidders.
In a Dáil reply to McGrath, Minister for Finance Michael Noonan said the loan sale was a “complex transaction”.
Best return for the State
He said the Nama Board exercised its judgement as to how best to fulfil its duty to obtain the best achievable financial return for the State.
“The full cooperation of the debtors was key to achieving the maximum value of the portfolio given the complexities involved,” said Noonan.
The minister said he is advised that the preparatory phase for the sale involved consideration of a range of options to maximise a return including consideration of various approaches by potential purchasers which had already been in direct contact with the major debtor connections to acquire some or all of their assets.
He said Nama was extensively consulted regarding options for the portfolio including identification of potential parties for inclusion on a panel of credible bidders.
The reply shows 16 potential acquirers were initially considered.
Three bidders
However, upon advice from its loan sale adviser and legal advisers, Nama selected just three bidders for the final process.
The minister said the three bidders were selected based on “their interest in the portfolio and on their willingness to meet Nama’s minimum reserve price for the portfolio”.
The minimum reserve price was established by reference to up-to-date independent valuations of the underlying secured assets, said Noonan.
He said the shortlisted panel of bidders was sufficient to ensure a competitive process adding that the shortlisted parties had sufficient funds to complete the transaction.
I am advised that the process was predicated on the receipt of three competitive bids and would not have completed unless three such bids were received.
Finally, I am advised that a high level of competitive tension was generated throughout the sales process and that three bids were received on the advised bid date for the transaction. Nama accepted the highest bid which exceeded its minimum reserve price and independent valuations for the portfolio.
McGrath said there needs to be an explanation as to why the debtors had an involvement in the selection of potential bidders.
“The same right was certainly not afforded to many other Nama debtors who had their loans sold on to international funds,” he said.
“I believe the Comptroller & Auditor General should examine Nama’s approach to the sale of Project Tolka and other asset sales that were not fully open and competitive with all potential bidders being given the opportunity to bid for the assets,” added McGrath.
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