Intrum completed its analysis on the Cerved bad loans unit by mid-February: sources
MILAN (Reuters) – Intrum, Europe’s largest debt collection firm, is expected to complete due diligence to possibly buy the bad debt arm of Italian firm Cerved by mid-February, two sources close to the dossier, as the industry prepares for consolidation.
Italy’s loan collection industry has grown in recent years, fueled by nearly € 200 billion ($ 222 billion) in bad loans from banks to deal with the legacy of a severe recession. With sales slowing, players are looking to increase their size to increase profits while reducing costs.
Intrum INTRUM.ST, which created an Italian joint venture through a € 3.6 billion deal with Intesa Sanpaolo ISP.MI in 2018, submitted in December a non-binding cash offer to purchase Cerved CERV.MI bad loan business.
Both sources said Intrum’s Italian arm is due to complete its valuation of Cerved Credit Management’s books by mid-February, a necessary step before a binding offer.
The unit has received an approximate valuation of around 400 million euros.
The asset has also attracted interest from Credito Fondiario, an Italian bad-debt bank controlled by US fund Elliott, which last year hired Goldman Sachs and Deutsche Bank to evaluate strategic options.
Credito Fondiario has informed Cerved’s board of directors that it would be ready to explore a reverse merger to integrate its business into Cerved Credit Management, two other sources familiar with the matter said.
Under the proposal, the combined unit would later be split up and the majority of its shares distributed to Cerved shareholders.
The first two sources said that Cerved kept a channel of communication open with Credito Fondiario, which remained outside the formal tendering process followed by Intrum.
Cerved, who works with Mediobanca and Credit Suisse, said in late October that he could sell or merge his bad loans unit.
But the investment funds that piled up in the bad debt market in Italy during the expansion phase, buying both bad debt and collection firms, are now less inclined to face more growth. slow and at higher asset prices – posing a barrier for investors looking to sell.
Credito Fondiario requested a merger with rival IFIS last year IF.MI, but discussions collapsed on governance issues. IFIS CEO Luciano Colombini said on Tuesday they were unlikely to resume.
(1 USD = 0.8973 euros)
Reporting by Valentina Za; edited by Mark Potter