ECI Accelerates Sale Of 140,000 Doubtful Loans

10 April 2017 – Voz Populí

Financiera El Corte Inglés has selected three overseas funds as candidates to go through to the final round of its tender to award the first sale of doubtful loans in its history. The entity that is jointly owned by Banco Santander (51%) and El Corte Inglés (49%) has chosen Axactor, Cabot Financial and Link Finanzas as the finalists in Project Alexandria.

Through this process, Financiera El Corte Inglés wants to clean up the worst part of its credit portfolio, by selling off loans that it deems irrecoverable. Project Alexandria comprises 140,000 doubtful credits, mainly corresponding to loans worth €160 million.

This operation is generating a great deal of interest in the market, because to date, El Corte Inglés and its financing arm have not put any portfolios on the market. For this reason, the funds are all willing to pay a premium in order to begin to collaborate with the largest consumer finance company by volume of loans.

The three funds selected to participate in the final phase of the process are investors that have been operating in Spain for a while. They all have their own recovery platforms and they have a vested interest in making a name for themselves in this market.

Who are the candidates?

Axactor arrived in Spain two years go. It is a Nordic group founded by former directors of Lindorff, one of the largest platforms in this segment in Europe, which in Spain controls Aktua and provides services to Sabadell and BMN. Like its fellow group from Norway, Axactor arrived in Spain chequebook in hand and within a few months had purchased several portfolios plus the business and team at Geslico, the former subsidiary of Lico Leasing.

Cabot is also an international recovery platform, based in the United Kingdom, and with connections to Encore, one of the largest global groups, itself based in the United States. Cabot established itself in Spain a couple of years ago and made its break with the acquisition of one of the largest servicers, Gesif.

Meanwhile, Link Finanzas is another British fund whose interest in Spain dates back even earlier than those of the other two investors. Link has been purchasing portfolios in the Iberian market for years. Last year, it consolidated its international presence with the purchase of the last vestiges of BBVA’s consumer business in Italy, for €100 million.

One of these three investors will be awarded the first portfolio to bear the El Corte Inglés brand. They are expected to submit their binding offers, which could amount to €15 million – €20 million, after Easter.

The latest data from Asnet and the CNMV reveal that Financiera El Corte Inglés is one of the market leaders by market share and profit, given that in 2016, it earned more than €66 million. Besides this portfolio, there are currently more than a dozen portfolios in the market, from the main entities in the country, including: BBVA, CaixaBank, Bankia, Liberbank, Ibercaja and Popular, amongst others.

Original story: Voz Populí (by Jorge Zuloaga)

Translation: Carmel Drake

Norwegian Group Axactor Buys Geslico From Fortress

13 May 2016 – Expansión

On Wednesday, the US fund Fortress signed the sale of Geslico, the recovery firm of the former savings banks, to a new player in the Spanish market, the Norwegian group Axactor.

Through this agreement, Fortress has almost completely withdrawn from the financial sector, where it now only owns Lico Leasing. The opportunistic fund decided to backtrack because of the administrative obstacles that it came up against when it tried to take control of the savings’ banks financial company – 15 months. In recent months, it has also sold part of the stake that it held in Paratus, the former financing arm of General Motors, GMAC, to the British firm Cabot Financial.

The acquisition by Axactor represents the arrival of another Norwegian specialist firm in Spain. The financial crisis that the Scandinaivan countries experienced in the 1990s forced them to specialise in this type of business, something that they are now taking advantage of in the face of the accumulation of troubled banking assets in markets such as Spain.

Alongside Axactor, Lindorff has been one of the most active players in Spain in recent years. In fact, Axactor’s team in Spain originated in Lindorff, with executives such as Juan Manuel Gutiérrez Alcubilla (pictured above, right), the former Finance Director of Lindorff, now leading Axactor as the Country Manager.

Through the purchase of Fortress’ stake, Axactor España hopes to generate revenues of more than €40 million in 2016, compared with €10 million in 2015. The Norwegian group will employ a workforce of almost 500 people, more than twice the current number, across 9 operating centres. In addition, the operation will allow it to increase the volume of debt under management to €3,600 million. This investor has purchased portfolios from Oaktree – a Bankia portfolio – and York – from Ibercaja – in recent months. The advisors to this operation were N+1, on the side of Fortress and KPMG, on the side of the Norwegian group.

Original story: Expansión (by J. Z.)

Translation: Carmel Drake

Fortress Finalises Its Withdrawal From Spain

17 November 2015 – Expansión

Strategy / The US fund will close the sale of Paratus to Elliott and Cabot Financial this week. It will also complete the ERE affecting more than 50% of Lico Leasing’s workforce.

The opportunistic fund Fortress is continuing its withdrawal from the Spanish financial sector. The US investor is finalising the sale of one of its financial businesses in the country, namely, Paratus, a platform that specialises in the management of problematic banking assets, which Fortress has controlled since 2009.

According to several financial sources, the sale of Paratus will be signed this week with the fund Elliott Advisors and the British group Cabot Credit Management Group, owned by JC Flowers and Encore Capital, taking ownership.

Each of the investors will take over a different part of Paratus’ business. Elliott is most interested in the real estate division and in the team. At the beginning of the sales process – known as Project Coast and advised by N+1 – Paratus held loans amounting to €152 million, secured by 866 properties; 500 homes worth just over €100 million; and a team comprising 43 professionals.

Meanwhile, Cabot is interested in acquiring the unsecured loans, which Fortress is selling for €426 million. The British group is looking to build upon its recent entry into the Spanish market, following its purchase of the Gesif platform from Elliott.

In addition to this possible sale, Fortress is also reducing its exposure to the Spanish financial sector by conducting an ERE at Lico Leasing. At the end of 2014, this subsidiary of Fortress had 130 employees. Through the restructuring, the fund has got rid of the commercial divisions of Lico Leasing, its other major financial business in Spain, which it acquired from the savings banks just one year ago; this means that it will no longer capture any new loans.

Complex operation

Fortress will continue to manage Lico Leasing’s existing portfolio and will continue to operate Geslico, its subsidiary that specialises in problem loans. That company recently integrated two of Fortress’s other companies in Spain: Auxiliar de Servicios y Cobros and Gestión de Activos de Aragón.

Fortress’s commitment to Lico Leasing was cut short due to the time required for its approval – almost two years – and by the re-opening of the credit tap by banks following the measures introduced by the ECB.

The US fund will continue with its other activities in Spain, by providing financing to companies and the real estate market.

Original story: Expansión

Translation: Carmel Drake