29 May 2015 – Expansión
Project Coast / Fortress wants to dispose of one of its platforms, with 40 employees and a portfoliol of loans and homes amounting to €700 million.
(Photo: Michael Novogratz, Director at Fortress Investent Group)
Fortress, one of the first opportunistic funds to arrive in Spain has put up the ‘for sale’ sign over part of its business in Spain. The US fund has announced the disposal of its distressed debt management platform and of a portfolio of loans and homes amounting to almost €700 million.
The possible sale comes at a time when international investors are reviewing their strategies in Spain following the results of the regional and local elections. Even so, sources close to the transaction indicate that this deal was launched long before the election results were announced and that the fund remains firm in its commitment to Spain.
The investor has taken the decision after it completed the purchase of Lico Leasing from savings banks last year, with 500 employees and assets worth €600 million.
Following this purchase, Fortress wants to sell its Paratus platform. The firm originated from General Motor’s former financing arm, GMAC. After being rescued by the US Government in 2008, GMAC – currently known as Ally Financial – sold its European business to Fortress, which represented the fund’s first foray into Spain. The fund started to purchase non-performing loan portfolios in Spain in 2009, and ended up managing a portfolio amounting to €4,000 million.
The opportunistic fund has engaged N+1 to advise on the sale of Paratus; several weeks ago the consultancy firm distributed information to potential investors regarding the so-called Project Coast. Following the first phase of the process, this week N+1 will announce which funds and platforms will go through to the final phase, which is expected to close at the beginning of July.
According to sources in the financial sector, this transaction is primarily targeted at overseas funds that want to establish a base in Spain. Investors such as Elliot – with Gesif -, D.E. Shaw – with Multigestión – and Cerberus – with Gescobro – have closed similar deals in recent years.
According to the information distributed by N+1, Paratus currently manages four asset portfolios and has two service contracts, which in total correspond to assets under management amounting to almost €1,000 million. The sale also includes the current team, comprising 43 professionals.
Almost €700 million of the loans and homes managed by Paratus will be transferred into the hands of the buyer. Of those, €426 million are unsecured loans without any kind of collateral; €152 million are loans secured by 866 properties; and another 500 homes are worth just over €100 million. Most of the real estate exposure is located in Cataluña, Andalucía and Valencia.
Following this sale, Fortress will focus its strategy in Spain on Lico Leasing and on its subsidiary Geslico – where it recently undertook an ERE –, which render similar services to those offered by Paratus. Through Lico, the fund has a banking licence as a financial credit establishment, which was granted by the Bank of Spain in December 2014.
Following those endeavours, it completed its largest purchase in Spain, by purchasing debt in Realia amounting to €440 million, and since then, it has acquired small real estate portfolios and participated in the financing of indebted companies.
The fund in Spain is led by the banker José María Cava, founder of Gladia Capital and a former director of BBVA.
Original story: Expansión (by Jorge Zuloaga)
Translation: Carmel Drake