Intrum Justitia AB has confirmed a binding offer to Intesa Sanpaolo over the creation of a joint server of non-performing loans (NPLs) in the Italian market.
Should the offer be accepted, it would see a merger of Intesa Sanpaolo’s NPL recovery operations and all of Intrum’s current Italian operations into a servicer of NPLs in Italy. Intrum would own 51 percent of the joint venture.
Under the proposal, the joint venture would enter into a 10-year exclusive servicing agreement with Intesa Sanpaolo for the vast majority of the bank’s new NPL inflow during this period.
Intrum will consolidate the joint venture in the financial reporting and, together with a co-investor, will acquire a 51 percent participation of a NPL portfolio with a gross book value of €10.8bn (£9.3bn) to be deconsolidated from Intesa Sanpaolo.
The portfolio will be held by a securitisation special purpose vehicle (SPV). Under its offer, Intrum will own 80 percent of the 51 percent of the holding in the SPV. It added a co-investor has committed to co-invest for an amount corresponding to the remaining 20 percent of the 51 percent holding in the SPV.
The SPV will be financed by non-recourse senior asset backed notes. Intrum said it will not consolidate the SPV in the financial reporting.
Intrum’s estimated total net cash investment for its holding in the servicing platform and its interests in the SPV is €670m. The net investment envisages no further syndication. Intrum added will make an initial payment of €156m at the end of April 2018. The remainder of the purchase price will be paid at closing, which is expected at year-end 2018.
Along with approval from Intesa Sanpaolo’s board, the transactions are subject to authorizations being received from the relevant authorities.