Lone Star’s Banking Bet Pays Off as BPCE Buys Novo Banco (1)

Lone Star will sell its majority stake in Portugal’s Novo Banco SA to French banking group BPCE, earning the private equity firm a huge windfall from the bet it made on the sector’s recovery almost a decade ago.

The transaction values Novo Banco at around €6.4 billion ($7.4 billion), according to a statement Friday. The US buyout firm, which injected €1 billion in the rescued bank when it bought a 75% stake in 2017, stands to make around €4.5 billion on its investment, a person familiar with the matter said.

The deal, which adds Portugal’s fourth-largest lender to BPCE’s banking ...