• Transaction / Assets
    Mortgage portfolio
  • Seller
    Evo Banco
  • Buyer
  • € MM

Apollo Sells Evo’s Mortgages to Elliott Ahead of the Bank’s Sale to Targobank

14 May 2018 – Voz Pópuli

Evo Banco is divesting its mortgages before its own sale goes ahead. The entity owned by the US fund Apollo has decided to transfer a large part of its housing loan portfolio to another opportunistic investor, the fund Elliott, according to financial sources consulted by Voz Pópuli.

The fund led by Enrique Tellado has sold two old portfolios that Apollo purchased years ago. The first from Citi in 2015, comprising almost 8,000 loans worth €338 million. And the second from General Electric (GE Money) in 2016, containing almost 5,000 loans worth €413 million.

In total, more than €700 million – a balance that has decreased, due to repayments since acquisition – by around half the mortgage loan amount, according to the accounts for 2016.

The sources consulted explain that Evo Banco and Apollo have taken this decision because they considered that it would be more profitable to sell this part of the bank separately than together with the rest of the entity. The banks that are assessing the acquisition of Evo are more interested in its card and consumer business, rather than these mortgages.

Negotiations with Targobank

Following the sale of the mortgages, Apollo is focusing on the sale of Evo to Targobank, as revealed by this newspaper. The subsidiary of the French group Crédit Mutuel has nudged ahead of Bankinter and Novo Banco in the bidding. Nevertheless, those entities are still paying close attention to the on-going negotiations, in case an opportunity to enter the process opens up.

Since the start of the auction, Apollo has set an estimated price of around €300 million for Evo. Nevertheless, according to the sources consulted by this newspaper, the sale could be closed for just over €250 million.

For Targobank, this purchase would represent a boost to its business in Spain with a client portfolio such as Evo’s (with 1 million customers) who are used to the digital platform and a limited branch network. The French bank’s subsidiary has assets worth €2.5 billion, compared to Evo’s, which are worth €5 billion.

Meanwhile, Elliott is one of the major opportunistic funds at the global level. Its founder, Paul Singer, is best known for the bet he made in Argentina when he bought debt unpaid by the Government and secured its repayment within a matter of months. In Spain, the firm used to own the recovery platform Gesif, which it sold to the British firm Cabot.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake