Elliott-Controlled Firm Considers Italian IPO

(Bloomberg) -- Credito Fondiario SpA, an Italian financial services firm controlled by U.S. activist investor Elliott Management Corp., is considering a listing on the Milan stock market as soon as the second half of the year.

Credito Fondiario is a bank focused on purchasing and managing debt and is involved in several deals with lenders that are shedding bad loans. Italy’s banks have stripped more than 100 billion euros ($114 billion) of non-performing loans from their balance sheets in the last three years, making the country the most active in Europe’s soured debt market.

“The IPO is one of the targets we are considering for the end of 2019 or 2020, depending on market conditions but also on other strategic options that the company could evaluate in the next few months,” said Iacopo De Francisco, the firm’s general manager.

Elliott became a shareholder in the Rome-based company in 2016 and is now its biggest investor with an 82 percent stake. Tages Capital LLP, an alternative investment group overseeing about $51 billion of assets, and senior management own the remaining stock. Elliott, whose investments in Italy include shares in Telecom Italia SpA and soccer club AC Milan, first bought a minority stake in Credito Fondiario in 2016.

“Our shareholders are long-term investors and, also in case of the IPO, they will remain part of the company and they’ll guarantee their support to Credito Fondiario,” De Francisco said.

Credito Fondiario last year acquired Banca Carige SpA’s non-performing loans servicer along with a portfolio of 1.2 billion euros of bad loans. It also agreed to buy a 7.8 billion-euro package of soured exposure from Banco BPM SpA in December along with a majority stake of its servicing platform. In 2017, it was awarded the “master servicer” role for a 26 billion-euro NPL portfolio originated by Banca Monte dei Paschi di Siena SpA, Italy’s fourth-largest lender.

The transaction with Banco BPM also is a key step for the IPO because “it will include all the additional value generated by the deal,” said the bank’s Chief Investment Officer Guido Lombardo.

“An IPO could be a smart move” following the successful listing of bad-loans manager doBank SpA in 2017, said Massimo Famularo, head of Italian NPLs at Distressed Technologies. “It could bring fresh funds to help consolidate its position among the new challenger banks currently emerging in the Italian market, such as Illimity.”

Credito Fondiario, which manages more than 50 billion euros of assets, expects to have generated more than 20 million euros of profit in 2018 and targets a return on equity above 20 percent by 2020, up from about 10 percent at the end of last year, the two executives said during the interview at their office in Milan.

The managers also said:

  • Bank will revise its 2018-2020 business plan this year to include the effects of the purchase of Banco BPM’s assets
  • The Banco BPM deal will boost Credito Fondiario’s workforce to more than 400 employees from about 250

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