Blackstone & Oaktree Vie For the Hercules Portfolio

16/07/2014 – Expansion

The troublesome mortgages of Catalunya Banc will fall into hands of one of the two finalists: the team of Blackstone or the one led by Oaktree. The two consortia submitted their binding offers on Monday and the Catalonian entity will pick the winner any day now. They have proposed the highest, €3.5 billion bids which is considered a very good price for Catalunya Banc and the Fund for Orderly Banking Restructuring (aka Frob).

The alliance of Oaktree, Pimco, Deutsche Bank, Marathon and Finsolutia offered the most equity, however Frob prefers the bid of Blackstone and TPG as the two funds dispose of hundreds of loan management experts in Spain, thanks to the acquisitions of  Catalunya Caixa Inmobiliaria and Servihabitat (from CaixaBank), respectively.

The Key Movement

Hercules Project“, as the sale of the toxic assets was denominated, is the key in the sale of Catalunya Banc itself. Two previous attempts to sell the nationalized entity fizzled out as that-time bidders demanded the Asset Protection Scheme which Frob repelled. The agreement with Oaktree and Blackstone will allow the Fund to cut in the public assistance significantly and will boost the possibility of successful sale of the Catalonian bank.

Frob will cover the loss of €1.5 billion by entering the sale of NPLs as a co-investor who will take the worst quality part of the portfolio. It consists of three sub-portfolios including performing, sub-performing and competely non-perfoming loans. Around 38.000 of them are backed by houses.


Original article: Expansión (by Jorge Zuloaga)

Translation: AURA REE