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Blackstone Wins the Toxic Asset Portfolio of Catalunya Banc

17/07/2014 – Cinco Dias

The greatest private equity fund in the world and its ally Texan Pacific Group (TPG) bidded out another team led by Oaktree with such big-name investors as Pimco, Deutsche Bank, Marathon and Finsolutia. The €6.5 billion portfolio compound of soured loans of Catalunya Banc was at stake. Spain´s Fund for Orderly Banking Restructuring (or Frob by its acronym in Spanish) is pleased with the transaction as now it may untroubled start the final bidding for the nationalized bank itself.

The “Hercules” portfolio became a target of many large funds and banks from all around the globe. Eventually, the Frob sold it with a nearly 50% discount and added public assistance amounting to €1.5 billion in order to cover possible asset damage. Moreover, Catalunya Banc has already made provisions for another €1.5 billion. Given all that, Blacstone disembursed €3.5 billion to take the loans home.

Therein, its Anticipa Real Estate (former CatalunyaCaixa Inmobiliaria acquired in April by the fund and Magic Real Estate) will service the soured financial assets.

Now, the Frob is going to keep its word and create an asset securization fund backed by the mortgages of Catalunya Banc. The tool will be held both by Blackstone and the State. The debt will be issued in two tranches (senior and junior) and purchased by the two firms respectively. The senior indebtness will be linked to profit for investors and the Frob´s task will be to absorb the losses or split the benefits.

Although Anticipa allows Blackstone to collect the default in viable cases, the acquisition gives the fund almost 40.000 collateral dwellings on a silver plate. Private equity firms like this one rarely offer the in-lieu deed of payment to the tenants and instead immediately ask for the keys to sell the properties. The Frob, however, warned Blacstone it will have to follow the Good Practice Code.

Sale of the toxic loans was crucial for Catalunya Banc as it also goes under the hammer on Friday. The entity will change hands automatically if any of the bidders (among which we find CaixaBank, Santander, BBVA and Société Générale) will submit an over-€200 million offer.

The bank has tried to sell its office network scattered out of Catalonian region, considered a deal by Popular and EVO Banco, but finally it was waived by the Frob that wanted to avoid more public assistance. 


Original article: Cinco Días (by A. Gonzalo & Juande Portillo)

Translation: AURA REE