Cerberus, Apollo & TPG Clash Over Preferable Contract of Sareb

30/10/2014 – Expansion

Three large international funds, Cerberus, Apollo and TPG, are competing for one of the four asset management contracts awarded by the bad bank, Sareb. This juicy portfolio includes loans of Bankia and real-estate-backed credits of Banco de Valencia.

Project Ibero, as the bidding process was named, targets at granting management of Sareb’s €50 billion load of REO assets to specialized companies. Recently, the administative board of the bad bank has decided that due to high complexity of the operation each contract will be signed in phases.

As no concrete issues have been discussed, the meeting could be attended by executives with some interest conflict: Remigio Iglesias, Santander’s CEO, allied with Apollo; Antonio Massanell (vice-president of CaixaBank) teamed up with TPG; nor Miguel Montes, general director at Banco Sabadell, whose real estate arm Solvia takes part in the bidding.

The project consists of four portfolios including: first, mentioned above €20.23 billion worth of Bankia’s loans and Banco de Valencia’s assets, second containing REO properties of Catalunya Banc, BMN and Caja 3 valued at €14.65 billion in total, third €8.01 billion in assets proceeding from NCG Banco and Liberbank, and the last carrying along collaterals of Bankia and assets and loans of Ceiss and Banco Gallego amounting to almost €7.8 billion.

The Competition

The first and most desired portfolio (as it encompasses 40% of all assets) is very likely to fall into hands of Cerberus and its Spanish spin-off Haya Real Estate. The reason is that the fund has purchased Bankia Habitat, servicer of Bankia, and outsourcing the management now would mean an enormous cost. Moreover, for Cerberus it would be equal to losing large market share in Spain. Still, Apollo with its 85% stake in Altamira and TPG with its 51% in Servihabitat could submit interesting counter-bids.

According to sources close to the task, negotiations are no walk in the park for two reasons. On one side, Sareb demands an upfront payment and on the other, if the business plan is not accomplished, management fees will be lower.

Apart from Cerberus, Apollo and TPG, other three funds strive at getting one of the contracts: Centerbridge, Solvia and Abanca.


Original article: Expansión (by Jorge Zuloaga)

Translation: AURA REE