The sale of default credits is attracting the attention of many foreign funds. But, when the time comes, very few share the cake of this business. Only two firms, Savia Asset Management, from Javier Botín, son of the president of Santander and the U.S. hedge fund Elliott, have retained two thirds of the default loans auctioned by banks this year.
In total, these two firms have taken part in operations that have moved a volume of loans of 4085 million Euros, 68% of the 6000 million Euros transferred by Spanish banks since the beginning of 2013.
This percentage rises even more if we take into account the other two funds in the ranking, D.E. Shaw and Lindorff, which accumulate another 1300 million Euros in absorbed default credits. In total, the four more active funds cover 90% of the operations.
The ranking is led by Emilio Botín. The son of the president of Santander has found his place in the sector as a middleman between U.S. hedge funds and Spanish banks. He represents these funds in their operations, investing jointly with them and receiving later the management contract of the acquired assets.
In total, he has closed four operations of this kind in 2013, acting as a matchmaker between BMN and Marathon; Popular and Perry Capital; Ibercaja and Yorvik; and BBVA and York, in an agreement advised by KPMG.
These operations have made Botin one of the key players in the management of default credits in Spain, with nearly 3000 million Euros in managed assets.
Along with the Spanish businessman, the important volume of default credits acquired by the hedge fund Elliott, founded by the controversial Paul Singer, considered the inventor of the vulture funds, stands out. Elliott is the winner of the operation Itálica, from Bankia, closed in July but his name had not been known until now.
Elliot has acquired a portfolio of around 1000 million Euros in default credits from Bankia to medium and small sized companies, which will be managed by Gesif. This hedge fund also acquired 300 million Euros from Santander.
Another fund that is back on stage is D.E. Shaw, from the multimillionaire ex advisor from Bill Clinton, David E. Shaw. This fund has closed another operation whose result was unknown until now, the Operation Ulyses, with which Cajamar has gotten rid of 700 million Euros in default credits.
Lindorff, a Nordic group, has joined the Spanish businessman and the U.S. hedge funds. This financial firm has acquired two portfolios: a consumer one from Bankia, included in Itálica and another worth 300 million Euros from Santander. Lindorff has become one of the leaders of the sector in this segment, with banking portfolios acquired for a volume of 3500 million Euros.
Cerberus also stands out among the great international funds with closed operations in Spain, as it has acquired a portfolio from Liberbank and part of one from Bankia. Meanwhile, Apollo has opted for acquiring credits (although also default ones) with the acquisitions of Evo Banco and Finanmadrid.
After these operations, the institutions prepare their machinery to sell more portfolios in the next few weeks. Meanwhile, the first ones to sound out the foreign investors are Sabadell, with a portfolio of 500 million Euros in default credits from medium and small sized companies and consumer ones from CAM; and Cajamar, that will sell more than 300 million Euros.
The sale of banking default credits, along with those of real estate assets, are awakening a great interest in foreign funds. South American, Asian and Arab investors have arrived in the last few months. An Australian one, Pepper, has joined them, announcing last week the acquisition of the U.S. fund Oakwood, owner of the Spanish recovery platform Vesta. Pepper is one of the main competitors in this sector on an international level.