KfW Selling Shares in B&C-Hit German Firm

KfW Bankengruppe, Frankfurt, Germany, says it has agreed to sell its shares in IKB Deutsche Industriebank, a German company that has been hard hit by the U.S. subprime mortgage crisis, to U.S. private equity firm Lone Star. The purchase price for the 90.8% stake in the Dusseldorf-based company was not disclosed, but KfW described it as having an "adequate" and "positive" value. KfW also said it has agreed to share "certain portfolio and legal risks" with the Dallas-based Lone Star in the deal, but added that the agreement calls for KfW to acquire a smaller share of IKB's on-balance-sheet portfolio than originally planned. In addition, Lone Star will provide KfW with "additional equity," according to the latter company. Lone Star is a known buyer of subprime mortgage assets. KfW is 80% owned by Germany's federal government.