Offers for Gescobro Fall Short of Cerberus’s Asking Price

13 May 2019 – La Información

Cerberus Capital Management cannot find a buyer for Gescobro. The US investment fund put the debt recovery specialist on the market at the beginning of the year, but so far the offers submitted have fallen well below its expectations in terms of price.

Hoist Finance, the Spanish subsidiary of a Swedish bank, and Cabot, a British fund dedicated to the purchase of non-performing loans (NPLs), have expressed the greatest interest in Gescobro, but their offers, amounting to around €200 million each, fall well short of Cerberus’s initial expectations of between €300 million and €350 million.

Sources in the market are questioning the value that Cerberus is assigning to Gescobro, given the current market prices and its operating profit (its EBITDA amounted to €11.3 million in 2018). Nevertheless, the US fund is defending its price thanks to the high number of problem loan portfolios that the company has acquired in recent years, whose gross value amounts to more than €8.6 billion.

Specifically, Gescobro is currently managing 12 unsecured loan portfolios with a combined nominal value of €8.3 million and 2 secured loan portfolios with a nominal value of €300 million. The prices of such portfolios typically reach less than 5% and around 30%, respectively. The debt recovery firm also employs 410 workers and has agreements to manage €3.5 billion in NPLs for the main Spanish banks.

Original story: La Información (by Pepe Bravo)

Translation/Summary: Carmel Drake

Sabadell Acknowledges to Goldmans that it is planning to Sell Solvia

1 October 2018 – Bolsamania

The sale of Solvia is on the table. Or, at least, that is what Sabadell has said to Goldman Sachs. Representatives from the two entities held a meeting last week in which Sabadell reiterated its forecast that it would save €150 million per year from the sale of its doubtful assets, including the sale of the servicer.

“The company reiterated its aim to save €150 million per year from the sale of its doubtful exposure, which it is hoped will offset the negative dynamics in the United Kingdom”, said the US entity in a report drafted after the meeting with Sabadell and with other entities, which was published last week.

The document also indicates that “the managers (of Sabadell) highlighted that this aim assumes the sale of Solvia”. The US entity is considering two scenarios, both the sale of Solvia and its continuation within the Banco Sabadell group. According to explanations from Goldman Sachs, the potential sale of the servicer could be good for the bank’s capital and would not dilute its profits.

Alternatively, if the company decides to hold onto Solvia, the entity’s profits would be higher than forecast given that Sabadell would continue to receive the profits of €40 million that Solvia contributes to it, indicates Goldman Sachs in its report.

A spokesman for the entity explains that, in any case, Solvia has never been a core business for Sabadell, in other words, it has never formed part of its main focus. On occasion, in fact, the bank’s CEO, Jaime Guardiola, has explained that “its business” is banking and not real estate. In any case, the spokesperson indicates that the day that a good opportunity presents itself, the bank will assign Solvia “a valuation”.

Sale or stock market debut

The sale is one of the possibilities that Sabadell is considering for Solvia, but it is not the only one. Sources in the sector consulted by Bolsamanía explain that the bank has already received some offers for the real estate asset management company, although it has not ruled out any of them yet.

Another option that the entity would have if it decides to divest the servicer would be to list it on the stock market, a possibility that the market has speculated about on several occasions over the last few years. Nevertheless, the same spokesperson for Sabadell explained that currently there is more “appetite” to buy the “servicer” than to invest in it in the event that it were to debut on the stock market.

In any case, the only fixed plans for Solvia, for the time being, are to remain under the ownership of Sabadell, given that the company is responsible for exclusively managing the assets that the bank is going to transfer to Cerberus Capital Management following its agreement in the summer.

Sabadell will transfer the majority of its real estate exposure to that fund, comprising assets with a combined gross book value of around €9.1 billion (€3.9 billion net). The operation is structured around the sale of the Challenger and Coliseum portfolios to several newly-created companies, which the fund will control (80%) and in which the bank will own the remaining stake (20%).

The last servicer

Solvia is the last bank servicer that is still owned by the entity that created it. Although Sabadell has transferred most of its property to Cerberus, it has held onto its servicer, unlike the other large banks, which have transferred their asset management companies to the different funds to which they have agreed to sell the assets managed (…).

Sabadell launched Solvia Gestión Inmobiliaria ten years ago, in 2008, and retains ownership over it today, with a workforce comprising around 800 employees and with assets under management of more than €30 billion, as well as €3.2 billion in loans managed.

Original story: Bolsamania (by Elena Lozano)

Translation: Carmel Drake