Monte dei Paschi banking group’s new ceo Marco Morelli just came back from a series of meetings with potential international investors who might be able to secure the 5 billion euros capital increase announced at the end of July together with a plan to sell 9.2 billion euros of non-performing loans (see here a previous post by BeBeez), MF Milano Finanza, writes today.
While the securitization of Npls might be finalized by the end of the year the most sensitive issue is raising fresh capital for the bank. So Mr. Morelli is aiming at finding a group of investors who might cover a significant stake of the capital increase, something between 1.5 and 2.5 billion euros.
The most likely candidates are intrernational pension funds, sovereign funds and private equity funds with a specific focus on turnaround and the financial sector. However it is fair to say that private equity firms are asking many more guaratees about their own intervention in the governance of the bank than any other institutional investor.
Investindustrial has been the only specific name of a private equity firm which has been circulating for the last few weeks about a possible interest in the deal. Although Investindustrial’s managing principal Andrea Bonomi is intrigued by the project, he seems to have no intention to find himself again in a difficult situation such the one he had experimented with Banca Popolare di Milano. If Investindustrial was to enter Mps’ capital, it would ask a guarantee to actively intervene in the bank restructuring plan with a go-ahead by the Superivision Autorithies and by the Italian Government.
And the same request would come from every other private equity firm, included the four private equity firms who had been enrolled a couple of months ago by former Intesa Sanpaolo’ceo and former Economic Development Minister Corrado Passera who submitted an plan for a recapitalization of Mps and an Npls sale which was alternative to the one that was finally announced at the end of July. Now Mr. Passera is said to have submitted again that plan to Mps’s advisors JPMorgan and Mediobanca, together with support from the same private equity firms (see Il Sole 24 Ore ).
The name of the four private equity firms enrolled by Mr. Passera had never been disclosed but it is not difficult to imagine that private equity firms looking at the Mps dossier might be Apollo, Lone Star and Apax (those three delivered bids for the four good banks which were split last November from bad banks after a rescue by the Italian Government); Oaktree (which had bought Banca Lecchese from Banca Etruria), Cerberus and Goldentree (among the bidders in the auction for GE Capital Interbanca as well as Apollo and Lone Star); Atlas Merchant Capital, Baupost, Centerbrige and Warburg Pincus (which are also bidding for Banca Popolare di Vicenza and Veneto Banca).
The most worrying issue is overstaffing. Something more in that direction might be announced in mid October when Mr. Morelli will outlay his strategies or next November when the whole business plan will be presented.