Italy’s Banca Ifis announced yesterday that it had singed an agreement with GE Capital to buy control of GE Capital Interbanca (download here the press release). The Italian bank, which is chaired by Mr. Sebastien Egon Fürstenberg and led by ceo Giovanni Bossi, will invest about 2 billion euros in the deal as Banca Ifis will pay to GE Capital 160 million euros for the bank while reimbursing all GE Capital Interbanca’s debt to GE Capital which is expected to be 1.8 billion euros at the closing date, MF Milano Finanza writes today (while GE Capital Interbanca’s debt was 2.3 billions at the end of 2015).
The closing of the deal is subject to the go-ahead by the Supervision and Antitrust Authorities and is expected to be in Q4 2016, while the two banks will effectively merge in january 2017. The two banks will then form a group counting 1,300 employees working with 85k clients and managing more than 11 billion euros of assets.
The deal is to be read in the frame of a strategic decision by General Electric to sell off most of its financial activities in the world in order to focus on the industrial ones. The decisio to sell GE Capital Interbanca became public in Spring 2015 (see here a previous post by BeBeez).
More in detail, Banca Ifis will buy a 99.99% stake in GE Capital Interbanca including its subsidiaries active in the factoring, leasing and lending sectors. Banca Ifis won bids from funds managed by Apollo Global Management and Lone Star private equity firms and by Credito Valtellinese in an auction managed by Deutsche Bank (see here a previous post by BeBeez). Previously the dossier had been studied also by other private equity firms such as Cerberus, Goldentree and Oaktree (through its portfolio company Banca Lecchese).
The acquisition will be financed through Banca Ifis’s cash reserve coming from deposits (which is expected to be about one billioneuros at the closing date) and through a 950 million euros securitization of some of GE Capital Interbanca’s assets (mainly loans and leasing contracts). Moreover Banca Ifis will launch a one billion euros securitization of factoring loans of its own portfolio. So at the closing date, after the 2 billion euros cash out, the bank is expected to lay on one billion euros of cash.
As far as GE Capital Interbanca’s non performing exposures are concerned (117.5 millions in net bad loans at the end of 2015 and 337.7 millions of potential bad loans), they are not to be object of securitization right now but will be soon be object of a strategic deal.
Thanks to this deal banca ifis will be able to extend its activity to leasing and lendig while further developing its factoring activities and becoming a leader in specialty finance for small and medium enterprises in Italy, from initial financing to non performing loan (investing and managing).
Financial advisors to Banca Ifis for the deal were Banca Imi and Kpmg Advisory Corporate Finance, while Clifford Chance law firm advised the bank on the legal issues. BonelliErede law firm advised GE Capital instead.
Banca Ifis reached a 150.9 million euros inremediation margin at the end of last June, with a 7.1% increase versus H1 2015 net of 124.5 million euros proceeds from an extraordinary sale of Italian Government bonds in the first semester of 2015. The Distressed retail loan division contributed for 61.1 million euro, thanks to a 202,8% jump in the period. Banca Ifis’s Common Equity Tier 1 Ratio (CET1) was 13.2% at the end of last June (from 14.2% at the end of 2015).
