Italy's Cerved in advanced talks to clinch debt collection arm deal: sources

MILAN (Reuters) – Italian credit group Cerved is in advanced talks with U.S. investment firm Centerbridge to clinch the long-awaited sale of its debt collection arm which is valued at about 400 million euros ($476.68 million), two sources told Reuters.

FILE PHOTO: The new 100 euro banknote is seen in the secretive vaults inside the Bank of Italy, in Rome May 21, 2019. Picture taken May 21, 2019 REUTERS/Yara Nardi/File Photo

The unit has also drawn interest from Italian real estate and credit management firm Prelios and other private equity funds including Apollo and Apax, the sources said, speaking on condition of anonymity.

Centerbridge is the frontrunner in the discussions and could clinch a deal in the coming weeks, possibly paving the way to a full takeover of Milan-listed Cerved which has been on the radar screen of several heavyweight buyout funds in recent years, the sources said.

Cerved, Prelios and Apax declined to comment while Centerbridge and Apollo were not immediately available for comment.

Cerved, which has a market value of 1.4 billion euros, came close to selling its credit management unit to Intrum, Europe’s biggest loan recovery firm, in February 2020 – just weeks before a deadly coronavirus outbreak in northern Italy.

Intrum, which operates in Italy through a joint venture with Intesa Sanpaolo, valued Cerved Credit Management at roughly 500 million euros during last year’s negotiations but has since lost interest, the sources said.

The coronavirus pandemic is now expected to stoke a new wave of impaired bank loans, reigniting investor interest in the Italian market where forecasts point to an increase of around 100 billion euros in soured loans by the end of next year.

Centerbridge has extensive credit management experience in Italy where it acquired Banca Farmafactoring in 2015 from Apax and subsequently listed it in Milan the following year.

Prelios, owned by Davidson Kempner Capital Management, has emerged as another strong contender for the business, which ranks as one of Italy’s leading players in the management of non-performing loans, the sources said.

A former unit of Italy’s Pirelli group, Prelios is looking at the purchase of Cerved Credit Management as a way to bulk up its valuation before Davidson Kempner implements its exit strategy, possibly with an initial public offering (IPO) on the Milan bourse, one of the sources said.

FULL TAKEOVER?

The Cerved unit suffered a 12.3% fall in revenues from 126,289 euros in 2019 to 110,764 euros in 2020 due to the early termination of a collection contract with Monte dei Paschi di Siena and the fallout of the pandemic.

U.S. private equity firm Advent made a bid approach in early 2019 to buy the entire share capital of Cerved and take it private in a deal worth about 1.85 billion euros, but negotiations fell through soon after press reports revealed that discussions were underway pushing up Cerved’s share price.

The sources said the sale of Cerved’s credit management unit could reignite interest from some buyout funds which have been monitoring the company as a possible private equity target in recent years.

Cerved saw its revenues and income fall 2.6% to 351.7 million euros in the nine month period ending in Sept. 2020, with core earnings dropping to 141.8 million euros from 155.1 million euros last year.

($1 = 0.8391 euros)

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