Credit Agricole is selling its private equity unit to UK-based buyout shop Coller Capital for roughly 300 million euros ($389.92 million), Reuters reported Friday. The deal will reduce the risk-weighted assets of Credit Agricole by 900 million euros, Reuters wrote. Coller Capital specializes in buying secondary private equity assets.
(Reuters) – Credit Agricole SA agreed to sell its private equity unit for just over 300 million euros ($389.92 million), a banking source close to the deal said, in a sign that buyers exist for the plethora of assets European banks have put on the block — at the right price.
The sale to Coller Capital, a UK-based firm which specialises in buying secondary private equity assets, will reduce the risk-weighted assets of Credit Agricole by 900 million euros, the French bank said in a statement on Friday.
That is just a fraction of the 30 billion euros in risk weighted assets the bank — which earlier this week announced its second profit warning of the year — has said it aims to ditch by January 2013.
“In terms of risk-weighted assets it’s peanuts compared with Credit Agricole S.A.’s total of 370 billion,” said one London-based analyst. “But it’s another sign that banks are unwinding all the kinds of activities that were very sexy during the leverage boom. This kind of thing takes up management time and has an unfavourable impact from Basel III.”
Credit Agricole shares were up 1.4 percent by 0910 GMT, outperforming the European sector, which was 0.6 percent higher.
A spokeswoman for Credit Agricole declined to provide further financial details of the deal, but the source close to the deal told Reuters that Coller Capital was paying “a little over” 300 million euros.
Other European banks and insurers have also been scrambling to unload non-core divisions as they face tougher capital and solvency requirements.
Credit Agricole’s larger rival BNP Paribas is mulling a sale of its majority stake in property unit Klepierre , financial daily Les Echos reported on Friday. French insurer AXA has had its own private equity unit — substantially larger than Credit Agricole’s — on the block for months now.
“More and more, the banks are now being forced to sell their business lines, sometimes even growth units, which raises many doubts about their future results,” said Benoit Peloille, a strategist with Natixis.
Credit Agricole, which expanded its global footprint through acquisitions up to the 2008 financial crisis, is trying to reduce its financing needs by 50 billion euros by the end of 2012.
Credit Agricole and French rivals have been hit by a liquidity drought even as they struggle to lower risk and boost their financial strength to comply with tough new capital regulations.
On Tuesday, Credit Agricole said it would post a full-year loss after taking 2.5 billion in writedowns for goodwill and the declining values of its equity stakes in Spain’s Bankinter and Portugal’s Banco Espirito Santo. (By Lionel Laurent and Christian Plumb)Get your FREE trial or subscribe now to Buyouts to find new deal opportunities, super-charge your fundraising efforts and track top managers.