06 November, Milano Finanza
The three teams of investors are finishing evaluating the 8 billion-euro NPL portfolio put for sale by Banco Bpm (-2.14% yesterday on the Stock Exchange after having passed the stress test). The due diligence started in the summer, and it turned out being a particularly demanding process due to the dimension of the portfolio and the deadline set by the bank. Banco, assisted by Deutsche Bank and Banca Akros as financial advisors and by Deloitte as industrial advisor, intends deciding by the end of the year, confirming the deadline for the binding offers on 14th November, although some investors requested to postpone it by few days. The deadline set by the bank might be explained by the intention of requesting a Gacs on the whole portfolio or part of it. As the state guarantee on securitisations has been recently extended by other five months, the bank might want to move on time to get this opportunity. It’s certain that the due diligence will go on till the very last day to gather as much information as possible.
The analysts working on the portfolio have to be very selective. While the bigger holdings, for a gross amount above 500 thousand euro, are being analysed one by one; the smaller ones are being examined in clusters. Basically, servicers identify a sample, namely sub-portfolios, which, with a very low error margin, can sum up the characteristics of the whole portfolio. The samples (or clusters) are classified based on various categories: amount, geographical position, typology (for instance, residential or commercial assets) or juridical status. Each sample is evaluated for some specific aspects that give a clear picture of the credit conditions: generated cash flows, underlying real estate guarantee and related collection curves. Finally, all these data must be contextualised in the current economic scenario of the country, starting from the GDP growth expectations and the real estate market trends. This due diligence work generally is useful for the bank and the investor to determine the correct price.
The perimeter of the operation hasn’t been defined yet. The team led by Edoardo Ginevra is cautious about the dimension of the stock to be sold and whether or not to sell also the management platform. The determining factor will be the final price offered by the teams and consequently the effect of the operation on the balance sheet. If Banco Bpm decides to sell most of its NPL stock (up to 8 billion of nominal value, as a part of the loans had been excluded from the operation), the of the platform in the transaction will be very likely. On the contrary, if the bank guided by Giuseppe Castagna decides to sell a smaller portfolio (around 3.5-4 billion), it will be useful to keep its own internal management platform. This is particularly true if considering the investments carried out right after the merger to optimise the portfolio processing and collection activities.
Three teams are competing for the portfolio. The team composed of Texas Pacific Group, Christofferson Robb & Company, Davidson Kempner and Prelios allegedly made a very interesting offer regarding the acquisition of the NPL portfolio only; while the teams doBank-Fortress-Illimity and Credito Fondiario-Elliot are also interested in the platform.
Source: Milano Finanza
Translator: Cristina Ambrosi