(Reuters) – Five U.S. private equity funds have expressed interest in the “bad bank” unit of Italy’s Banco Popolare (BAPO.MI), according to sources, in a sign of growing appetite from foreign investors for real estate and distressed credit in the country.
Banco Popolare, Italy’s No.4 lender by assets, said in March it was seeking to sell a majority stake in its Release unit, which owns and manages soured loans and real estate assets with a total gross value of 3.2 billion euros ($4.5 billion).
The cooperative lender, which currently owns 80 percent of Release, has hired Equita Sim as adviser on the transaction.
Two sources close to the sale told Reuters that U.S. private equity firms Apollo Global Management (APO.N), The Blackstone Group (BX.N), Cerberus Capital Management, Fortress Investment Group and Lone Star Funds are in the race to buy the majority of Release. Fortress has teamed up with Italian property group Prelios (PCRE.MI) for a potential bid.
Banco Popolare, Apollo, Blackstone and Cerberus declined to comment. Lone Star, Fortress and Prelios were not immediately available to comment.
Release had a book value of around 300 million euros as of end-September 2013, an analyst said.
Cerberus recently bought a bad debt portfolio from Italy’s UniCredit (CRDI.MI), while an investment fund managed by billionaire financier George Soros acquired 5 percent of shopping centre group Immobiliare Grande Distribuzione (IGD.MI).
“Release owns mainly loans linked to leasing contracts with Italian clients, so its business is in both property and credit,” said one of the sources, who has knowledge of the assets on sale.
Analysts expect a slowly emerging recovery in the euro zone’s third-largest economy to bring a rise in real estate transactions in the country. Collections on bad loans are also starting to improve.
The due-diligence on Release is due to start in April and binding offers for the bad bank are likely to follow.
($1 = 0.7214 euros)
Reporting by Francesca Landini in Milan. Additional reporting by Andrea Mandala and Valentina Za; Editing by Pravin Char.
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