Tag: divestment

Bankia Puts Property Worth €4,800M Up For Sale

6 May 2015 – Expansión

Project Big Bang / The financial entity has put a batch of homes, land and commercial buildings up for sale, with the objective of disposing of all of the foreclosed assets left on its balance sheet.

Bankia has decided to accelerate the process to divest its real estate assets with a ‘macro-transaction’ involving a large block sale. The financial institution has launched so-called Project Big Bang, which includes a portfolio of residential and commercial assets (including offices and shops), as well as land, worth €4,800 million.

The transaction is still in its very early stages, involving initial meetings with investors, but it will represent the largest asset sale process seen to date (excluding transfers of debt with real estate collateral).

The properties up for sale include assets that Bankia did not transfer to Sareb following its nationalisation, as well as foreclosed assets resulting from subsequent defaulted payments. Most of the portfolio corresponds to residential assets. Thus, of the €4,800 million assets that Bankia has included in the batch, €3,300 million related to residential properties at 31 March 2015. In total, the bank will transfer 38,545 residential units (flats, chalets, parking spaces and storage rooms), with a total constructed surface area of 3.6 million square metres.

Along with the €3,300 million of residential assets, Bankia is selling 4,938 commercial units worth €1,100 million.

Land at zero cost

The portfolio also includes 2,589 plots of land with a total surface area of 4.6 million square metres. This land has a value of zero, according to Bankia, having been fully provisioned.

The sale is being coordinated by Credit Suisse and KPMG. The transaction may be closed as a single deal or through the sale of several blocks. The sale value may also decrease from €4,800 million to a smaller amount, say sources close to the process.

Many of the large funds, including Blackstone, Lone Star and Apollo, have already expressed their interest in the portfolio. These investors will have to compete with Cerberus, which has a preferential right to examine Bankia’s real estate portfolio. This “preferential” arrangement forms part of the negotiations that the US fund has held with the Spanish entity in recent years. In 2014, Bankia transferred its Bankia Habitat business unit to Cerberus for a consideration of between €40 million and €90 million, together with the 400 professionals who work for the platform.

Last September, Cerberus joined forces with the Norwegian fund Lindorff to acquire some of the doubtful and substandard loans, plus those that had doubtful or substandard outlooks, worth €900 million, which the entity chaired by José Ignacio Goirigolzarri (pictured above) was selling, as part of the Somo transaction. In February, Bankia launched a campaign to accelerate the sale of its remaining properties.

The clean up

Project Big Bang represents the largest divestment initiated by Bankia to date in the foreclosed asset and doubtful debt segment. The entity chaired by José Ignacio Goirigolzarri has been one of the most active in this market, having transferred almost 80 portfolios containing problematic loans since 2013, with a nominal value of €10,000 million.

Initially, Bankia undertook these types of transactions due to necessity, since the restructuring plan agreed with Brussels compelled it to divest non-strategic assets amounting to €50,000 million.

Although it has now almost completed this plan, the entity has decided to ‘step on the divestment accelerator’ in 2015 in order to reduce its default rate and focus its resources on new productive assets that improve its financial results. As well as the foreclosed assets, Bankia is also currently negotiating the sale of problematic mortgages, property developer loans and hotel debt.

If it closes all of these transactions, the nationalised group would become the first entity to withdraw from the segments considered by the market as a burden to the sector.

Original story: Expansión (by R. Ruiz and J. Zuloaga)

Translation: Carmel Drake

Barceló Acquires 42.5% Stake In Occidental Hoteles

5 May 2015 – Expansión

42.5% shareholding / The tourism group acquires the stakes held by Amancio Ortega, owner of Inditex, and several minority shareholders, and continues to negotiate with BBVA to take control of the chain.

The sale of Occidental Hoteles has been unblocked with Barceló’s purchase of a share of its capital. The tourist group has acquired a 42.5% stake from Amancio Ortega, owner of the textile empire Inditex, and several minority shareholders. In parallel, it is also negotiating with BBVA, which controls the remaining 57.5%, to gain control of 100% of Occidental and strengthen its position in the Caribbean.

Although the exact amount of the transaction is unknown, it has been closed with a discount of between 40% and 50% with respect to the €700 million that BBVA and Ortega paid in 2007. That was the figure that the shareholders hoped to obtain through the divestment process launched in 2013, which was thwarted last December, with Barceló as the favourite, due to differences over price.

Then, Barceló was bidding together with the fund Caribbean Property Group (CPG). Now, the tourism group is going to single-handedly undertake the purchase of the shares held by Ortega (who holds 23.63% through his company Partler 2006), Gregorio de Diego (who controls 13.5% through Tamar International) and the Miarnau family (whose company Iosa Inmuebles holds 5.26%).

Competition

The transaction, which is pending approval by the Mexican competition authorities, will be structured as a financial investment, and so Barceló will not take over the management of Occidental’s hotels. The chain operates 13 properties in the Caribbean and owns the majority of those establishments.

Nevertheless, sources in the sector are convinced that BBVA will end up selling a non-strategic stake. In fact, that is the joint position that the entity chaired by Francisco González and Amancio Ortega held until the end of 2014. The only thing that has separated them has been the timing (of their respective exits).

The textile businessman wanted to accelerate his exit from Occidental before the company looses value, since there is no growth plan on the table. In contrast, BBVA was keen to wait for a better offer and set a limit below which it was not willing to divest. In the end, the partners have broken their shareholders’ agreement, which has opened the door to Occidental for Barceló.

In terms of convincing BBVA, the close ties that unite the companies work in the tourism group’s favour. Barceló, BBVA and FCC created an asset company Grubarges in 1998, with the aim of channelling its surplus investors and growing in the hotel sector. Grubarges was dissolved in 2004 due to strategic differences between the partners, but the relationship is still strong.

If Barceló acquires 100% of Occidental, it will strengthen its position in the Caribbean, one of the priorities on its roadmap to become the world leader in the holiday hotel sector. Through the integration, Barceló would obtain a presence in new countries – Colombia, Aruba and Haití – and would strengthen its position in the Dominican Republic, Mexico and Costa Rica. Furthermore, the transaction would involve an investment plan to reposition Occidental’s properties.

Barceló currently operates 94 hotels and 30,000 rooms in 16 countries. In 2014, the company generated profits of €46.4 million, up 85.6% and turnover of €2,056.6 million, up 6.2%.

Original story: Expansión (by Yovanna Blanco)

Translation: Carmel Drake

Bankia’s Divestment Plan Comes To An End After 400+ Sales

20 April 2015 – Expansión

97% of the plan has been completed / In two years, the entity has transferred 200 investments, 130 real estate companies and 80 loan portfolios, amounting to more than €15,000 million.

Over the last two years, Bankia’s divestment team has had to go to the notary’s office every other day. The intense activity in terms of the sale of investments and loan portfolios has resulted in 400+ transactions since 2013 and the entity is now close to fulfilling the mandate imposed on it by Brussels.

In total, Bankia has transferred 200 financial and industrial investments; 130 real estate companies; and 80 problem loan portfolios, according to sources close to the entity.

Thus, Bankia has already exceeded the target it was set of divesting more than €50,000 million non-strategic assets – by the end of 2014, the figure was close to €59,000 million – but not all of the companies that were agreed as part of its rescue have been transferred. 3% of the plan agreed as part of the rescue still needs to be completed.

In this final sprint, which Bankia has until 2017 to complete, the entity will have to sell off dozens (tens) of real estate and industrial companies, many of which have filed for liquidation and have hardly any value.

Strong reputation

Over the last two years, the team at Bankia, led by the Director of Investments, Manuel Lagares, has earned the respect of foreign investors by closing the sale of portfolios worth €10,000 million and financial and industrial investments, worth €5,500 million.

Although Bankia was forced to make these divestments, the funds value the fact that it is one of the few entities that has not held back from sales processes and that it stands out as one of the best entities to have adapted to demand. Thus, overseas investors recognise that one of the first doors that they call at upon arriving in Spain is that of the bank chaired by José Ignacio Gorigolzarri (pictured above), as well as those of Sareb and the Frob.

Although Bankia has now almost completed its divestment plan, the entity continues to be very active in the market, as it seeks to improve its balance sheet and free up non-productive assets.

Some of the largest transactions conducted by the team at Bankia include the sales of its shares in: Iberdrola, which it sold for €1,500 million; Mapfre, for which it obtained €1,250 million; IAG, for which it earned €675 million; and Indra, which it transferred for €337 million.

Recently, the entity had decided one of the great real estate battles in recent years, which involved Realia, where it agreed to sell its 25% stake to Carlos Slim. It may also decide to transfer its stake in Globalvia soon, for which it is negotiating, together with FCC, with the Malaysian sovereign fund Khazanah Nasional Berhad.

Other transactions

Another transaction in the pipeline involves the sale of City National Bank of Florida, its North American subsidiary, which is pending authorisation by the Federal Reserve.

Together with its investments, Bankia has also transferred lines of business such as its asset manager, which was acquired by Cerberus; and Bankia Bolsa, which it transferred to GVC.

Original story: Expansión (by Jorge Zuloaga)

Translation: Carmel Drake

BBVA & Ortega Will Need To Reach An Agreement To Sell Occidental Hoteles

9 March 2015 – Expansión

BBVA is the primary shareholder in Occidental. Through a number of investment companies, the bank controls 57.53% of the chain.

Amancio Ortega, the owner of Inditex, holds a 23.62% stake through his investment company Partler 2006. The other shareholders together control less than 20%.

The shareholders of Occidental Hoteles return to the market in search of a buyer, after the transaction with Barceló failed in December. Disagreements over price will be key to the divestment. (…). The investor duo, which together own more than 81% of the company, are again looking for a replacement. (…).

Plan

In 2007, the partners acquired Occidental from Mercapital and La Caixa for €700 million, including a debt of €229.5 million. The owners planned to invest €340 million to grow the chain and convert it into a world leader in the leisure segment, but that was suspended due to the economic crisis.

Over time, Occidental became a non-strategic investment and after restructuring the business and refinancing its debt in 2013, BBVA and Ortega launched a process to sell their stakes at the beginning of last year. (…)

According to sector sources, BBVA and Ortega were trying to sell at a price in line with what they paid eight years ago, however the offers they received included discounts of between 40% and 50%, given the investment required in Occidental’s hotels. At the last minute, an agreement with Barceló and CPG fell through; according to terms of the alliance between the two parties, the fund was going to assume the financial outlay and Barceló was going to take over the management of the hotels.

Given the situation, the shareholders of Occidental decided to suspend the process, although they are now resuming their search for candidates. And that is where the discrepancies arise over how to execute the divestment.

Ortega, who put an end to his adventure with the NH Hotel Group a year ago, is keen to accelerate his exit from Occidental, whose value may well decrease over the medium term, since there is no plan in place to allow it to keep growing. Meanwhile, BBVA is more reluctant and has put a (price) limit below which it is not willing to divest. Both investors have signed an agreement, which means that they will study any offers they receive.

The problem is that sooner or later, they will have to reach a consensus, since an agreement exists between the shareholders that links the approval of agreements in meetings to a favourable vote of at least 51% of the voting rights of Occidental.

Moreover, on an exceptional basis, for matters such as the appointment of the chairman, a minimum quorum of 66% is required. (…)

The hotel chain has now started to modernise its portfolio, which includes 13 hotels, most of which it owns. In recent years, Occidental has significantly reduced its portfolio – when BBVA and Ortega acquired their stakes, the group had 80 hotels and 18,500 rooms.

Original story: Expansión (by Yovanna Blanco)

Translation: Carmel Drake

Cerberus Purchases Gescobro From Spanish Fund Miura

18 February 2015 – Expansión

Transaction / The US firm acquires the company that specialises in debt recovery, which has been controlled by the private equity firm Miura for five years.

Following its acquisition of Sotogrande, the US fund Cerberus is continuing to dominant transactions in Spain. Its latest target has been Gescobro, the debt recovery company, owned by the private equity firm Miura since 2010, which held more than 90% of its share capital, according to market sources.

The management team, which held a minority stake in the company, continue at the helm. Through this transaction (for which the consideration paid has not been disclosed), Cerberus strengthens its debt management capability, in particular after investing in bank debt in the Spanish market in recent months.

The US fund already owned Haya Real Estate (formerly Bankia Habitat), which, in addition to its real estate management services, also operates in the field of mortgages.

With the acquisition of Gescobro, Cerberus enhances its position in the debt recovery market, specifically in the consumer credit segment. Last year, Gescobro managed files with a value of €4,000 million. Miura first acquired shares in the company in 2010; until then it was owned by the founding family, the García-Godalls.

Gescobro employs nearly 300 professionals between its headquarters in Barcelona and its offices in Madrid. Heading up the company is Iheb Nafaa, the CEO, who is supported by Gemma García Godall, Head of Business Development and the daughter of the firm’s founders. The two executives were also shareholders of the group when Miura controlled the company and, according to market sources, both continue to hold a minority share.

The transaction, which was closed on Monday, is the second divestment made by the Spanish fund since it was established in 2008. The advisors to the transaction included PwC, on the side of Miura, and the law firm Ashurst, who worked with Cerberus.

Original story: Expansión (by Sergio Saiz)

Translation: Carmel Drake

 

Hispania Continues Takeover Bid For Realia Despite FCC’s Withdrawal

12 February 2015 – El Economista

The company, owned by Soros and Paulson, does not intend to increase its bid.

Hispania is continuing with its plans to buy Realia, the real estate company owned by Bankia and FCC, even though the construction company has decided not to sell its 36.88% stake.

The company, whose main shareholders are the business tycoons George Soros (pictured above) and John Paulson, announced a voluntary takeover for 100% of the real estate company at a price of €0.49 per share; and sources close to Hispania have confirmed to El Economista that they are going to proceed without making any changes to their offer. “The process is advancing normally, they are waiting for the CNMV to approve the prospectus and then they will launch a takeover bid with the same conditions as the one already announced”.

The company, which is managed by Azora, took this decision after holding a meeting to discuss the new situation following FCC’s withdrawal.

The group, controlled by the Mexican Carlos Slim, explained through a notification to the CNMV that “the decision reflects the fact that we are reviewing our investment and divestment plans, following the (capital) increase, which allowed us to strengthen the Group’s equity and financial situation”. Moreover, Slim, who took on a controlling stake in the construction company as a result of the (capital) increase, is also evaluating the legal options that would allow him to purchase Realia through one of his other companies.

Below market price

Hispania’s offer was never well received by the market, as it was considered to have offered a knock-down price for the real estate company, at 28% below Realia’s list price. Now, following FCC’s announcement, the situation is more complex, as Hispania needs its offer to be approved by 55% of its shareholders.

Besides the construction company, Realia’s second largest shareholder is Bankia, which controls 24.95%. The entity is under an obligation (having been mandated by Brussels) to sell its industrial holdings, however, it still has a margin of two years remaining to undertake these divestments.

Original story: El Economista (by Alba Brualla and Virginia Martínez)

Translation: Carmel Drake