6 July 2017 – Voz Pópuli
It could be the largest real estate operation of the last few decades in Spain. Santander has revolutionised the world of the major investments funds with the express sale of all of Banco Popular‘s property, after engaging Morgan Stanley to coordinate the sale.
The bank chaired by Ana Botín may sell all of Popular’s real estate assets and loans, worth €30,000 million, in one go. The process is going faster than investors expected. Santander and its advisor have given the funds it has invited to participate until the end of the month to submit their non-binding offers (NBOs). And the prices being floated amount to around €5,000 million, according to financial sources consulted.
Blackstone, Apollo and Lone Star are already working on the process and Cerberus may join them shortly. They are the largest opportunistic funds present in Spain, with the most financial muscle to be able to handle an operation of this kind. That is why they have been chosen. However, the doors to new investors have not been closed.
The idea is that the buyer will acquire a 51% (or higher) stake in a joint company together with Santander and that that company will hold Popular’s €30,000 million assets. These assets are provisioned at 69%, and so they have a net value of almost €9,250 million. We calculate therefore that to acquire 51% of these assets and loans, plus take over Aliseda (which Santander repurchased last week), the buyer will have to pay around €5,000 million.
The key, after the summer
In addition to the bids for the 51% stake, experts are not ruling out the possibility that one of the funds will go off piste and put a proposal on the table for a smaller package of assets. Santander is open to all ideas at this stage. The group plans to first listen to the proposals, analyse them over the summer and then negotiate the small print between September and December.
This is the operation that the large opportunistic funds have been waiting for since 2011. Those investors arrived in Spain during the worst period of the crisis with the purchase of small loan portfolios and real estate platforms, with their sights set on the hope that large opportunities would arise some day, such as in this case with Popular.
In fact, they have been complaining for a couple of years that the portfolios coming onto the market are too small (ranging between €500 million and €1,000 million) for their appetite, given that other types of competitors have emerged that have caused prices to soar and have left them without any assets.
It is also worth considering that the funds that are participating in this process raised capital at the end of last year to invest in Southern Europe. Specifically, €15,000 million. As such, they have liquidity to handle operations such as Popular’s.
The three funds and Cerberus starred in major acquisitions in Spain during the crisis. Blackstone acquired Catalunya Banc’s macro-portfolio of doubtful mortgages amounting to €6,400 million. Apollo purchased Altamira, several portfolios and Evo Banco. And Lone Star secured Project Octopus (€4,500 million in large real estate loans), purchased Neinor and listed it on the stock market, and has recently agreed to acquire Novo Banco in Portugal.
Original story: Voz Pópuli (by Jorge Zuloaga)
Translation: Carmel Drake