Tag: SMEs

Bankia Sells €37M NPL Portfolio to LCM Partners through Débitos

17 July 2019 – El Confidencial

Bankia has sold a portfolio of doubtful assets worth €37 million to the London-based fund LCM Partners. The portfolio, called Marshmello, contains more than 170 secured loans granted to SMEs and distributed primarily in Madrid, Cataluña and Murcia.

The deal is the first that the partially nationalised financial entity has completed through the Débitos platform. Débitos is a German fin-tech that works in association with Beka Finance in Spain to allow financial entities and companies with unpaid amounts on their balance sheets to offer portfolios for sale to institutional investors.

Original story: El Confidencial (by Óscar Giménez)

Translation/Summary: Carmel Drake

Amazon Opens its Support Centre for SMEs in 22@ (Barcelona)

23 April 2018 – Eje Prime

Amazon’s support centre for SMEs has opened its doors in the 22@ district of Barcelona. From its Sell Support Hub facilities, the US company is going to offer support services to small and medium-sized companies (SMEs) in Spain, Italy and France that sell their products through Amazon Marketplace.

The facilities, which house more than 200 employees, are also going to be home to Amazon’s Research and Development Centre, specialising in machine learning. The date for the opening of that centre has not been released yet, but its doors are expected to open within the next few months.

From its new centre, Amazon is going to help companies understand how to use its tools to sell globally through its different web platforms. According to François Saugier, Vice-President of Amazon Marketplace in Europe, it is laying the foundations for companies to make the leap into the digital economy.

Seller Support Hub is going to facilitate the creation of 500 jobs over the next three years. Regarding the choice of Barcelona as the location for this centre, François Nuyts, Vice-President and Director General of Amazon.es and Amazon.it, said that “it is a city that combines international talent with a dynamic and innovative network of SMEs, entrepreneurs and startups”.

Original story: Eje Prime 

Translation: Carmel Drake

Spain’s First Listing Sponsor is Launched: Armanext

17 April 2018 – Eje Prime

From the Alternative Investment Market to Euronext. Some of the team members from Armabex, the company that specialises in the incorporation of Socimis onto the MAB, have joined forces for the launch of Armanext, the first listing sponsor (registered advisor) in Spain authorised by the leading stock market in the Eurozone, Euronext, which integrates the stock markets in Paris, Brussels, Amsterdam, Lisbon and Dublin.

The company is going to be able to advise, supervise and coordinate the admission of Socimis and SMEs onto the following markets: Euronext Access Paris, Euronext Access Lisbon, Euronext Growth Paris and Euronext Growth Lisbon. The companies that start trading on Euronext will have access to a market comprising around 1,300 companies and more than 5,000 investors around the world.

“From now on, Spanish Socimis are going to be able to comply with the requirement to be listed on an organised market such as the main Euronext market or on a Multi-lateral Trading System such as the Euronext Access and Euronext Growth markets, as permitted by the regulations”. “The pan-European stock market allows companies to opt for more flexible (financing) conditions adapted to suit family groups and SMEs, which require the intervention of an authorised listing sponsor (…)”.

Armanext is going to be led by Antonio Fernández, President of Armabex, Ana Hernández and Rafael Núñez. Hernández will provide experience in the securities and Socimi markets, whilst Núñez has a well-established track record in tax matters and business restructurings, gained during his time as a partner of two Spanish audit firms.

In September last year, Euronext opened offices in Spain, Italy, Germany and Switzerland with the aim of helping SMEs in those countries to develop their businesses on a larger scale through the securities markets.

Since then, several Spanish and European companies have expressed their interest in listing on Euronext and entering the Pan-European market. In the last month alone, two new companies joined Euronext from outside their domestic markets. On the one hand, the British pharmaceutical company Acacia Pharma made its debut on the Euronext Growth in Brussels whilst, on the other hand, the Italian company specialising in dental technology MediaLab started trading its shares on the Euronext Access market in Paris.

Original story: Eje Prime

Translation: Carmel Drake

Be Mate Teams Up With Fund Q Capital to Grow its Tourist Home Business

23 March 2017 – Expansión

The businessman Enrique Sarasola has found a new formula for accelerating the growth of Be Mate, the rental platform for tourist apartments, through which he is complementing his Room Mate hotel offering. The plan is to team up with the investment fund Q Capital, which will contribute €100 million of funding so that Be Mate can search for, adapt and manage between eight and ten apartment buildings in cities such as Madrid, Barcelona, Málaga and Sevilla.

“The project reinforces the idea that you can’t block progress”, explains Sarasola to Expansión, who also highlighted the importance of the fact that a “team as strong” as the one at Q Capital has decided to back the management of entire apartment buildings. The faces behind that firm include Íñigo Olaguíbel, Borja Oyarzábal and Borja Pérez.

Q Capital, founded in 2016, channels direct investments in Spain from Qualitas Equity Partners. Its objective is to find returns in segments such as SMEs and other niche areas not served by traditional financial operators.

Medium and long stay apartments

This alliance is going to give a boost to the concept already tested by Be Mate in the Plaza de España Skyline building: the management of entire buildings of tourist apartments. This business, inaugurated last year, is proving “a success”, explains Sarasola.

The novelty is not only in the financing, which is going to be provided by Q Capital, but also in the fact that Be Mate is going to go beyond the tourist home service to offer “apartments for medium and long stays, and for corporate use”. According to Sarasola, “it is another change that adapts to our times. We are pioneers in this field, but it is because we listen to our clients and we have identified that the need exists”.

Of the ten or so buildings planned, Be Mate has already identified five. The acquisitions will be undertaken over the next three years, initially in Spain, which is the “priority” market, but not at any price. “We will invest here for as long as the regulations are not prohibitive. If that changes, we will go overseas”, he warns.

Be Mate broke its own revenue record last year, by generating sales of €6 million, 10 times more than during the previous year. It sold 80,000 overnight stays for 30,000 clients, 40% of whom came from international markets. The company offers 10,000 apartments, 600 of which it manages exclusively.

Original story: Expansión (by I. de las Heras)

Translation: Carmel Drake

Co-Working Operators Leased 5-Times More Office Space in 2017

8 February 2018 – Expansión

Operators of co-working offices are gaining strength in Spain and multiplied by five times the space leased in 2017, to 40,500 m2.

The international co-working giants –WeWork, Regus, Glue Concept and Busining– are claiming their space in Spain and have recorded a milestone in the leasing of co-working office space in Madrid and Barcelona.

Last year, 40,500 m2 was leased for use by these kinds of work spaces, which represents a five-fold increase in the figure recorded the previous year, according to explanations provided by the real estate consultancy firm Savills Aguirre Newman.

Sources at the consultancy firm explain that the arrival of international operators has definitively reactivated the so-called serviced office sector in Spain, which includes business centres and co-working spaces.

Specifically, Regus, WeWork, Busining and Glue Concept closed 15 office space rental operations in Spain last year. Those operators opted for new and renovated buildings, with large and bright spaces, locations that are well-connected by public transport and with excellent services for their users in the vicinity of the offices, explained Ana Zavala, National Director of the Offices Agency at Savills Aguirre Newman.

By city, Madrid accounted for 82% of the surface area leased, whilst Barcelona represented 18%. By number of operations, 53% corresponded to Madrid, compared with 47% to Barcelona.

For the consultancy firm, the participation of this new model in the global office calculation for Madrid and Barcelona still has room for growth, as it currently accounts for around 5%. Thus, whilst in Madrid and Barcelona, the leasing by these types of business accounted for 3% in 2016, in London, they represented 10%.

“The growth in terms of leasing has been very significant in 2017, but the model is still very new in Madrid and Barcelona, and will depend on the success and demand that is generated. London is a much more mature market in terms of co-working in Europe and there the market share has amounted to around 9%-10% of the volume leased over the last two years”, said Zavala.

For the National Director of the Offices Agency at Savills Aguirre Newman, the benefits of these spaces are attractive for SMEs and micro-companies used to working in a collaborative way (…).

New players

In an effort to take advantage of the new needs in the market, the large Spanish Socimis Colonial and Merlin have also taken their first steps into this business. In this way, in October, the Catalan Socimi closed an agreement to acquire a controlling stake in the co-working platform Utopic_US. That agreement also includes the development of a strategic plan through successive capital injections by Colonial. Utopic_US, founded by 2010, has three centres in Madrid and will open another one in Barcelona within the next few weeks.

Also in October, Merlin announced the purchase of a stake in Loom House. In the case of the Socimi led by Ismael Clemente, its alliance with Loom House involves jointly converting some of the buildings in Merlin’s portfolio into co-working office spaces. Loom House currently has two co-working centres in Madrid, one in the Atocha area and another on Calle Huertas.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Cajamar Puts €200M Debt Portfolio Up For Sale

23 October 2017 – Expansión

Cajamar, the largest credit cooperative in Spain, with €39,943 million in assets, has placed a package of 1,450 delinquent loans on the market worth €200 million. The majority of the loans have been granted to small- and medium-sized companies and are secured by mortgage guarantees.

By autonomous region, 75% of the portfolio is located in the Community of Valencia and Andalucía; and the remaining 25% is situated in Murcia, Cataluña, the Community of Madrid and Castilla y León.

It is the first package of non-performing assets that Cajamar has put up for sale this year. In 2016, the entity completed two divestments of this kind. The first, closed during the second quarter, comprised doubtful and non-performing loans, as well as foreclosed properties, amounting to €524 million in total. The second, sold during the fourth quarter, contained non-performing loans only, amounting to €206 million.

As at 30 June, Cajamar held €3,885 million in doubtful loans and had a default rate of 12.38%. It had €3,776 million in real estate assets on its balance sheet. Of those, 50% are finished homes and 25% correspond to land. The group has prioritised sales through the retail channel, for which it enlists the support of its assets sales platform, Haya Real Estate.

The entity has just launched a commercial campaign that offers more than 4,000 properties with discounts of up to 40%. They include one-bedroom apartments in Alhaurín el Grande (Granada) with prices starting at €46,000.

Operating range

Cajamar has 1,090 branches across Spain, a workforce of 5,743 employees and 3.5 million clients. During the first half of the year, it earned €44.29 million. It holds an agreement in insurance with Generali, another in investment funds with Trea and it sells consumer loans from Cetelem.

Above all, the entity is dedicated to meeting the financing needs of small and medium-sized companies in the agri-food sector.

Original story: Expansión (by R. Lander)

Translation: Carmel Drake

KKR & Cabot Compete To Acquire Hipoges

31 August 2017 – Voz Pópuli

KKR and Cabot Financial are competing in one of the processes that has generated the most excitement amongst overseas funds in recent months. The two Anglo-Saxon investors are the finalists in the bid to acquire Hipoges, a platform created at the end of 2008 by former directors of Lehman Brothers, the investment bank that went bankrupt in September of that year.

The platform is controlled by Cerberus, with a 40% stake, and by its CEO, Juan Francisco Vizcaíno, who owns 18.3%. It is not clear how much of the company is up for sale, although the various sources consulted by this newspaper explained that the initiative to launch the sales process has been taken by the directors. The final price of the transaction could amount to €25 million.

The bid is being led by Alantra as an advisor and funds such as Bain Capital have participated in it, in addition to Cabot and KKR.

Hipoges has a presence in four countries, although most of its business is concentrated in Spain. In total, it administers almost €8,000 million for 22 clients, above all overseas opportunistic funds and financial institutions.

Intense competition

The platform advises investors regarding the acquisition of portfolios and the subsequent management of the assets acquired. Hipoges is responsible for administrating debt, filing claims to recover it, going to court and in the event that a property is repossessed, managing and selling it. It also competes with the major real estate companies, such as Haya Real Estate, Altamira, Servihabitat, Aktua, Aliseda, Solvia and with other independent firms such as TDX, Finsolutia and Copernicus.

Of the €8,000 million that it administers, 72% are unpaid loans granted to property developers and mortgages. The remainder are loans to SMEs (14%), consumers (12%) and invoices (2%).

By entering this process, KKR wants to take another step forward in its real estate strategy in Spain. After purchasing a portfolio of mortgages from Abanca – formerly NCG Banco – the North American fund is negotiating the acquisition of a platform that will allow it to continue gaining experience in the property sector.

Meanwhile, Cabot is another of the foreign groups that is most committed to the purchase of banking assets. It arrived in Spain in 2015 with the acquisition of Gesif and is hoping to enter the real estate business with Hipoges.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Sabadell Reports €2,000M In Additional Revenues From Sale Of 2 Portfolios

26 July 2017 – Voz Pópuli

Banco Sabadell is improving its financial figures. The entity chaired by Josep Oliu has closed several divestments over the last few months that will allow it to report extra revenues of €2,000 million this year.

Through this, it wants to avoid the market from drawing comparisons between it and Popular, as happened with Liberbank before the prohibition against trading short positions was introduced. After a few nervous days for the whole sector, Sabadell’s share price rose by more than 5%, following the express rescue of Popular, and its bearish positions decreased.

The divestments have accelerated in recent weeks, with the sale of two portfolios of doubtful debts and of a reinsurance agreement with Swiss Re, as a result of which it has registered proceeds of almost €700 million.

In terms of its portfolios, Sabadell has signed the transfer of two in the last few days. On the one hand, it has almost completed the sale of Project Gregal, with a volume of €800 million, to three funds. That operation was divided into three sub-portfolios: one containing real estate loans to SMEs (€200 million), which was acquired by D. E. Shaw; another containing non-performing loans to individuals, which has been awarded to Lindorff; and another containing non-performing loans to SMEs, which has yet to be sold and for which Cabot, Intrum and PRA are currently competing, according to financial sources. Market sources estimate that Sabadell will receive between €100 million and €150 million for that operation.

Strategic objectives

In addition to Project Gregal, Sabadell has also signed the sale of €950 million in loans to Oaktree, as part of Project Normandy. That operation has been underway for almost a year but has not been signed until now due to (disagreements regarding) the small print. The US fund has paid around €300 million for that portfolio of loans linked to real estate developments.

With these two operations, Sabadell is pushing ahead with its goal to reduce its balance of problematic assets at a rate of €2,000 million per year, per its announcement during the latest update to its strategic plan.

The sale of its subsidiary in the United States will be more important for its capital (which currently stands at 12%), which was announced in March for a value of $1,025 million, with profits of €450 million. That operation is pending approval from the US administrative authorities, which could be granted this quarter.

The same can be said of the reinsurance of a portfolio of individual life-risk insurance, for which Swiss Re has paid €683 million, resulting in net revenues of €250 million for Sabadell.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Saracho Calls Time On Ron’s Plans For Popular’s Bad Bank

15 February 2017 – El Economista

Project Sunrise, designed by Ángel Ron’s team at Popular to extract €6,000 million worth of real estate assets from the entity’s balance sheet, has run aground. With less than a week to go before Emilio Saracho (pictured above) takes over the presidency, the former global vice-president of JP Morgan has announced that he is not convinced by the plan and has put a stop to it, according to sources.

The vehicle had been approved by the Bank of Spain, but had not yet convinced the Spanish National Securities and Exchange Commission (CNMV) or the European Central Bank (ECB). Their aversion to the plan seems to have led Saracho to reject it. Although the star plan to clean up the balance sheet had received support from the bank’s Board of Directors, the difficulties involved in deconsolidating the portfolio of non-performing assets and the potential risks that could result for the future owners of the vehicle, are hampering its execution. (…).

Moreover, the real estate company has also been impeded by a more limited appetite than it had hoped for from the investment banks, whose involvement is key. The plan is for the company to be financed through senior bonds, subscribed to by those investors and subordinated debt, which will constitute the remuneration that the bank will receive from the company in the future. At the time, the entity confirmed that the interest expressed by JP Morgan, Morgan Stanley and Deutsche Bank was sufficient to crystallise the project. But, in order to deconsolidate the real estate company, the senior bond tranche must represent a majority and a low uptake from the investment banks is likely to increase the cost of that bond issue.

Ron acknowledged in his public farewell, alongside the CEO, Pedro Larena, that Project Sunrise has suffered certain changes from its original scope, but that Saracho was aware of these, along with other measures.

During the last quarter of 2016, the entity recognised an additional €3,000 million in non-performing assets and allocated €5,692 million to clean up efforts, rather than €4,700 million, the amount it had planned to set aside when it carried out its €2,500 million capital increase last summer. The effort reflects that recognition of a greater volume of toxic assets and also served to cover the costs of the adjustments to branches and staff, the impact of the floor clauses and the unexpected losses in TargoBank (…). Nevertheless, it was insufficient to reach the goal in terms of doubtful debt coverage and provisions for properties.

Shock therapy

Saracho was reportedly aware of all of this. Nevertheless, the banker will start work without a pre-determined road map (…) on the understanding that the bank needs to define a comprehensive shock plan.

Saracho will conduct a detailed analysis to assess the entity’s viability and to define its new strategy. Ron was committed to making the bank smaller, focusing on its profitable business niche of SMEs in Spain and spinning off its subsidiaries in the USA, Mexico and Portugal, where the interest aroused will ensure a positive return on investment – market sources speculate that the private bank, and even the insurance business, are included in this equation.

The sources consulted also say that these changes, if they are undertaken, would help restore solvency, but would not be sufficient to ensure the bank’s future. After a detailed analysis of the situation, Saracho will have to choose the best option for his shareholders from a handful of scenarios.

If he thinks the entity is viable, it is unlikely that he will undertake another capital increase (…), but may include transferring assets to Socimis or integrating them into real estate companies in which the bank holds a stake.

In the worst case scenario, the new manager faces the option of breaking up the group and selling it off in parts or by asset. And whilst a sale to a competitor or a merger is not unthinkable, a priori, it appears to be the least attractive option for shareholders, given the lack of interest in the sector.

Original story: El Economista (by Eva Contreras and Lourdes Miyar)

Translation: Carmel Drake

The Keys To Banco Popular’s Much Needed Recovery

19 January 2017 – Expansión

Analysts at Citi think that Banco Popular’s core business, which focuses on SMEs and corporates, is one of the most profitable in the Spanish banking sector. That is according to a recent report about the entity (still chaired by Ángel Ron), which anticipates a potential increase in the bank’s share price of up to 40%.

But the strength of Popular’s underlying business has been eclipsed for years by the problem assets that it accumulated during the real estate bubble. So much so that the analysts at the US bank consider that the entity’s capacity to drain its toxic real estate is its “greatest challenge” over the next few years.

“On the basis of our analysis, Popular has the largest volume of toxic assets of any of its peers, by far: in fact, it has three times as many if we take into account their relative size to the total volume of assets (18% compared to 6%)”, say sources at Citi. The analysts anticipate a series of difficulties for the bank when it comes to reducing its level of problem assets, which they consider represent a real “pain in the neck” for the entity.

In their report, Citi’s analysts assess the three ways through which Popular is seeking to rechannel its problem assets. In essence, the three pillars on which its recovery will be based are: the capacity to recover toxic credits, the sale of foreclosed assets and the effective management of Aliseda.

Cut its toxic loan balance in half

Regarding the toxic loans (non-performing loans or NPLs), Citi predict that the Directors of Banco Popular will manage to reduce the total volume from 17.1% of the total portfolio to just 8.9%. This reduction will be based on a lower inflow of gross credit, a higher recovery rate of doubtful loans and a more aggressive path of divestment than the one undertaken to date.

In terms of its foreclosed assets, the entity chaired by Ángel Ron (who will soon hand over the leadership role to Emilio Saracho) will have several specialist tools for developing, managing and selling those assets: Aliseda, Aliseda SGI, commercial agreements with third parties and its own network of bank branches. Citi’s forecast estimates that by 2020, Popular will have reduced its volume of foreclosed assets by around €8,000 million, i.e. to almost half of its current balance (which stands at €15,000 million) and excluding the almost €6,000 million that are going to be separated out into a different vehicle.

In terms of Aliseda SGI (in which Kennedy Wilson and Värde Partners own a 51% stake), which manages around €23,000 million in assets, its future is linked to what Popular decides to do in the end with some of the real estate assets that it is planning to segregate out into a specialist vehicle. “We estimate that it will take Popular nine years to free itself from all of its problem assets, including future flows from loans to property developers and mortgages in the non-performing category and relating to foreclosed assets”, they explain. In the opinion of Citi’s analysts, a spin-off operation involving the segregation of the assets managed by Aliseda would have three main benefits:

“It would accelerate the divestment of foreclosed assets…by one or two years; it would allow the underlying profitability of the bank’s business to surface sooner (due to lower financing and management costs) and it would free up around €4,000 million in theoretical provisions (40-50 basis points of regulatory capital)”.

Original story: Expansión (by Nicolás M. Sarriés)

Translation: Carmel Drake