Tag: Elliot

Fortress Puts Its ‘Paratus’ Platform Up For Sale

29 May 2015 – Expansión

Project Coast / Fortress wants to dispose of one of its platforms, with 40 employees and a portfoliol of loans and homes amounting to €700 million.

(Photo: Michael Novogratz, Director at Fortress Investent Group)

Fortress, one of the first opportunistic funds to arrive in Spain has put up the ‘for sale’ sign over part of its business in Spain. The US fund has announced the disposal of its distressed debt management platform and of a portfolio of loans and homes amounting to almost €700 million.

The possible sale comes at a time when international investors are reviewing their strategies in Spain following the results of the regional and local elections. Even so, sources close to the transaction indicate that this deal was launched long before the election results were announced and that the fund remains firm in its commitment to Spain.

The investor has taken the decision after it completed the purchase of Lico Leasing from savings banks last year, with 500 employees and assets worth €600 million.

Former GMAC

Following this purchase, Fortress wants to sell its Paratus platform. The firm originated from General Motor’s former financing arm, GMAC. After being rescued by the US Government in 2008, GMAC – currently known as Ally Financial – sold its European business to Fortress, which represented the fund’s first foray into Spain. The fund started to purchase non-performing loan portfolios in Spain in 2009, and ended up managing a portfolio amounting to €4,000 million.

The opportunistic fund has engaged N+1 to advise on the sale of Paratus; several weeks ago the consultancy firm distributed information to potential investors regarding the so-called Project Coast. Following the first phase of the process, this week N+1 will announce which funds and platforms will go through to the final phase, which is expected to close at the beginning of July.

According to sources in the financial sector, this transaction is primarily targeted at overseas funds that want to establish a base in Spain. Investors such as Elliot – with Gesif -, D.E. Shaw – with Multigestión – and Cerberus – with Gescobro – have closed similar deals in recent years.

According to the information distributed by N+1, Paratus currently manages four asset portfolios and has two service contracts, which in total correspond to assets under management amounting to almost €1,000 million. The sale also includes the current team, comprising 43 professionals.

Almost €700 million of the loans and homes managed by Paratus will be transferred into the hands of the buyer. Of those, €426 million are unsecured loans without any kind of collateral; €152 million are loans secured by 866 properties; and another 500 homes are worth just over €100 million. Most of the real estate exposure is located in Cataluña, Andalucía and Valencia.

New strategy

Following this sale, Fortress will focus its strategy in Spain on Lico Leasing and on its subsidiary Geslico – where it recently undertook an ERE –, which render similar services to those offered by Paratus. Through Lico, the fund has a banking licence as a financial credit establishment, which was granted by the Bank of Spain in December 2014.

Fortress has altered its strategy in Spain after its failed attempts to buy a real estate subsidiary, such as Altamira and Aliseda, and to enter Sareb’s capital.

Following those endeavours, it completed its largest purchase in Spain, by purchasing debt in Realia amounting to €440 million, and since then, it has acquired small real estate portfolios and participated in the financing of indebted companies.

The fund in Spain is led by the banker José María Cava, founder of Gladia Capital and a former director of BBVA.

Original story: Expansión (by Jorge Zuloaga)

Translation: Carmel Drake

Elliott, Apollo & Cerberus Strive For Cesce

18/06/2014 – Expansion

Investment funds Cerberus, Elliott and Apollo will tilt at a bidding for 50.2% of Compañía Española de Seguros de Crédito a la Exportación (Cesce, translated as Spanish Company For Export Credit) to be put up for sale by the Government soon. The three firms have previously invested in financial businesses like Sareb or savings banks.

In total, around 10 companies showed interest in the state company, among which one may find Spanish Mapfre, Mutua Madrileña or Axesor. The total value of Cesce is estimated at between 300 and 320 million Euros.

 

Original article: Expansión

Translation: AURA REE

The fund Elliott establishes a base in Spain after acquiring Gesif.

The hedge fund Elliot already has an operational base in Spain. This U.S. vulture fund, one of the most active ones in Spain in the last few months, has closed the acquisition of the recovery platform Gesif. The operation, closed in October, allows Elliot to have a local team to carry out new acquisitions in the next few months. The fund has analyzed the acquisition of NCG, although it will finally not participate in the bid.

Gesif is one of the five biggest companies within the recovery sector, with more than one million of default credits and 230 employees. Until now it was in the hands of several partners, like Daniel Villalba, a former member of the board at Abengoa and Vueling; and Melania Sebastián, a former executive at Caja Madrid, who will continue in the managing team. Gesif has grown at a faster pace since the recruit of Gonzalo Elejabeitia – a former executive at Vesta and Appollo – in charge of increasing the business with foreign funds. Elliott is one of the main funds in the world, with assets for more than 22.000 million Dollars. Its founder, the controversial Paul Singer, considered the creator of the vulture funds, has followed  the  operation  closely.  Sources  within  Elliot  explain  that  the  objective  of  the operation is to “increase the acquisition of portfolios and offer a service to other funds”.

Elliot had already entered the Spanish market: it acquired 1000 million Euros in default credits from Bankia and 300 million Euros in default credits from Santander. In all, Elliot would have paid around 50 million Euros for both portfolios.

The vulture funds have three ways to enter the Spanish market:

1)   From their headquarters in London or through a Spanish freelance, who charges for every closed operation.

2)   By hiring a local management company, such as Gesif, in order to recover the maximum amount of default credits.

3)   Through the acquisition of a Spanish firm, as Elliot has done or as the Norwegian Lindorff did with Reintegra, from Santander, or the German GFKL with Multigestión. This option means a greater bet for the country.

Source: Expansión

Javier Botin and the Elliot fund retain two thirds of the default credits from banks.

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.

Santander sells 300 million Euros in consumer loans to a vulture fund.

The Santander group has sold a portfolio of 300 million Euros in default consumer loans to Elliott Management, with a discount of 96%. This vulture fund, which keeps a virulent dispute with Argentina on the release of its sovereign debt, intends to do more operations in Spain.

The multimillionaire Paul Singer, public enemy number one in Argentina, lands in Spain. This investor has acquired a portfolio of default consumer credits from Santander Consumer Finance through its fund Elliott Management with a nominal value of 300 million Euros. Official sources from Santander declined any comments on this operation.

The price paid by Singer´s investing company is practically symbolic: around 12 million Euros, according to sources within the market. The difficulty in being able to recover anything from a portfolio of 87000 operations leads banks to offer bargain prices in order to get rid of them.

For Elliott Management, founded in 1977 by Paul Singer and with 21000 million dollars (16170 million Euros) in managed assets, this operation is the beachhead for future acquisitions in Spain. The group has available funds and considers that the current situation of the Spanish financial sector presents good business opportunities.

The majority of loans within the sold portfolio are for the purchase of cars, although there are also personal loans and for companies. The average amount is 3500 Euros.

The Santander group has closed similar operations during the last few months. In October 2012 it sold a portfolio of loans with a nominal value of 1000 million Euros to Bank of America Merril Lynch and in April 2012 it got rid of another 1000 million Euros in consumer loans, which were transferred to Fortress, specialized in the purchase of default loans.

The company Gesif has participated as a consultant in the operation, in order to measure the recovery possibilities of this portfolio and will offer Elliott its services to manage those default loans.

Paul Singer´s preference for the acquisition of high risk assets has lead him to conflicts with several governments, once his firm has tried to charge its investments in sovereign debt.

The most notorious case was the open conflict with the Argentinian government. Singer keeps a legal claim against the South American country for the non payment of a debt of 370 million dollars (around 270 million Euros) accrued in 2001.

In October 2012, Singer managed the withholding of the vessel Libertad, training ship of the Argentinian army, by the Ghanan government, as an asset which could be seized for the payment of a debt, but finally it was liberated and it returned to Buenos Aires last week.

Source: Cinco Días