Ibercaja Looks At Selling Its Property Platform To A Foreign Investment Fund

11/08/2014 – Expansión

The Basque group is seeking to show the value of the business in order to emerge stronger from of the European stress tests. BMN and Cajamar earned €50 and €225 million, respectively, in similar sales.

Ibercaja Bank is looking toward the market to raise capital. The financial group, which encompasses the assets of Ibercaja and Caja 3, is looking into selling its property platform to a foreign fund. This possible transaction is in addition to the efforts to look for new shareholders, led by JPMorgan, as previously announced by EXPANSIÓN.

According to financial sources, the transaction is an attempt by Ibercaja to emerge stronger from the European stress tests. For the same reason, the bank has boosted its half-year results with the sale of the bulk of its debt portfolio, for a value of €424 million.

The sale of the property business is still in a very initial phase and it will not be until September that the decision will be taken as to whether or not to give the transaction the green light. Nevertheless, Ibercaja has already contracted the investment bank, if necessary, to expedite and complete the sale between October and November. The Aragonese group would make no comment.

In this case, the bank would follow the example of other competitors and would be the eighth Spanish group to sell its real estate business, after Santander, Popular, CaixaBank, Bankia, Catalunya Banc, BMN and Cajamar.

Valuations

According to sources consulted among the foreign investment funds, the sale of Ibercaja’s bricks and mortar platform parallels those of Cajamar, which was sold to Cerberus for €225 million; and that of BMN, for which Centerbridge paid 50 million euros.

The price of this type of transaction is flexible. What is sold is the platform and a management contract lasting ten years. The higher the commission fixed for the period, the more upfront capital is offered by the funds, and vice versa.

Nevertheless, the value of this property business is expected to be less than that of Cajamar, given that Caja 3 transferred a large part of its problematic assets to Sareb last year. In total, it handed over to the company presided by Belén Romana assets valued, after discounts, at 2,212 million.

Besides that, Ibercaja had at the end of 2013 around 3,400 million euros in finance set aside for construction and property development and €1,146 million in foreclosed assets. Caja 3, meanwhile, had 422 million euros in loans to developers and €182 million in foreclosed assets.

Search for shareholders

In parallel with this transaction, in June Ibercaja began the search for foreign investors through JPMorgan. The group is looking to raise up to €300 million in capital, as a first step towards listing on the stock market and ending up with less than 50% of the bank’s share capital, as required by the most recent Savings Bank Act for entities that do not wish to create a reserve fund. According to financial sources, Ibercaja and the investment funds have, for the time being, rather differing viewpoints and the capital increase is not expected to be completed in the short term.

Original article: Expansión (by Jorge Zuloaga)
Translation: Aura REE

55