Mount Street Takes Over the Management of WestLB's NPLs in Spain
12 December 2017 - Expansión
The British firm also wants to negotiate agreements to manage the portfolios of Spanish banks and Sareb.
A new operator has arrived in the Spanish market for the management of debt in default or with a high risk of non-payment. Mount Street London Solutions has taken over a platform that manages the “toxic” portfolio of the former German entity WestLB and has whereby acquired an office in Madrid. Through this deal, the firm aspires to obtain new clients in Spain, including financial institutions and investment funds operating in the sector.
Mount Street was owned by the fund Greenfield Partners until February when its directors purchased the firm with support from the German bank Aareal Bank, which took over 20% of the share capital. In October, the loan manager took a leap in its business with the purchase of EAA Portfolio Advisors, an entity created in Germany to administer WestLB’s non-performing assets after the bank was rescued by the German Government in 2008. Its function is to try to recover those loans, restructure them, sell them on or foreclose the assets that secure them.
Of the €200 billion in problem loans that WestLB held, €22 billion remains, under the management of EAA. The portfolio includes loans, primarily to firms in the renewable energy sector, which WestLB granted in Spain before the crisis. By acquiring EAA, Mount Street has purchased its office in Madrid along with the 6 employees that manage its portfolio.
The objective of Mount Street is to use this foothold in Spain as a platform to grow towards new business areas, especially in the real estate debt segment. “The team that we have incorporated in Spain has been working for years to restructure debt in the infrastructure sector, in particular, in the solar energy segment, and we are now able to contribute our specialisation in the real estate area that we offer in the rest of Europe”, said Ravi Joseph (pictured above), Founding Partner of Mount Street, in an interview with Expansión.
The firm, which is headquartered in London, sees several opportunities for accessing the Spanish property market. On the one hand, he hopes to negotiate agreements with financial entities and/or with Sareb (…) to manage some of their portfolios of problem loans. Another option is to help those property developers struggling to make their repayments to allow them to “repurchase” their loans from the investment banks that acquired their debt from the banks back in the day. The final option is to collaborate with small investors that are still arriving in Spain interested in acquiring non-performing loans (…).
In Joseph’s opinion, the appetite of international investors to enter Spain is still very high despite the political crisis in Cataluña. “The major international investors are still very interested in Spain. Much more so than in Italy. Spain has entered a virtuous circle (…). The uncertainty in Cataluña may affect growth somewhat, but the overall trend will continue to be upward”.
After acquiring EAA, Mount Street now manages debt amounting to €48 billion in total.
Original story: Expansión (by Robert Casado)
Translation: Carmel Drake