Fortress, one of the opportunistic funds which has hunted more preys in Spain, has closed the acquisition of Lico Corporación, the group of financial services owned by the savings banks. The operation has been closed for an operation slightly below 200 million Euros after the approval of the general shareholder´s meeting, in spite of the reservations of some partners.
As confirmed by sources close to the transaction, the shareholders of Lico Corporación approved last Wednesday the transfer of all their assets and liabilities to Fortress, which had been negotiating the acquisition since the spring. This fund has won the bid over Pepper Investment Management, another fund of Australian origin managed in Spain by Enrique Marín (ex-Lehman Brothers) and who had presented an offer of collaboration with Goldman Sachs.
As advanced by El Confidencial at the beginning of June, BBVA and Sabadell, who had become shareholders of Lico Corporación by accident after acquiring Unimm and CAM, obliged the savings banks who historically had been in the capital to sell the firm. The losses of the last years – more than 80 million Euros – had forced them to contribute with fresh funds in order to avoid a patrimonial imbalance.
In view of the pressure of Francisco González and Josep Oliu, presidents of BBVA and Banco Sabadell, respectively, the rest of shareholders – Liberbank, Caja España, Banco Mare Nostrum, Unicaja, Novagalicia, Kutxa, Mapfre, Bankia, Caja 3, Catalunya Banc and Ibercaja and the Spanish Confederation of Savings Banks- decided to empower Société Générale to look for a buyer.
The decision to sell Grupo Lico was taken only five months after the dismissal program carried out by Lico Leasing, one of the biggest subsidiaries of the holding, which affected 43% of the staff made of slightly more than 200 employees. This downsizing meant a cost of six million Euros in compensations, a sharp adjustment through which all partners of the Spanish Confederation of Savings Banks, the main shareholders, wanted to adapt “its production capacity to the current scenario of economic activity.”
Fortress will do it now, as with this acquisition it assumes a platform that will manage the 3.000 million Euros in financial assets it has been acquiring in the last few years. One of the more important operations was the agreement with the Banco Santander to assume a portfolio of default personal credits of 1.100 million Euros. A transaction for which it paid 55 million Euros, as it acquired it with a discount of 95% on its value in books.
Lico Corporation, with assets of 745 million Euros, is the mother company of Grupo Lico, which was founded in 1988, twenty-five years ago. The holding is made of 21 companies that operate in the businesses of leasing, factoring, confirming, renting, corporate financing, collection of payments, valuation of portfolios, mediation in private insurances and real estate investment. However, the origin of the institution goes back to 1966, when Mapfre created Leasing International Company, a company which was entered by the savings banks in 1977.
The arrival of Fortress means some fresh air for Lico Corporación, whose accounts had already arisen some suspicions in the auditors. Deloitte warned in its last report against some “existing uncertainties on the capacity of the group to continue its operations”. Some of the factors of this doubt were the continuous fall of the volumes of new financing awarded by its depending institution Lico Leasing, as well as the amount of very significant losses; the great cash and credit restriction problems in the whole banking system.
An environment that made it difficult to “renovate the credit lines, so that at the end of the year nearly all the financing of the Group was the one agreed with its shareholders.”(…)