BCMGlobal announces the closing of its second investment in the Italian market in partnership with a group of leading international institutional investors including Swedish Albatris in a joint venture with U.S. based Three Line Capital.
The partners have purchased a secured non-performing loan portfolio from an Italian GACS securitization managed by doValue S.p.A. through the securitization vehicle Wings One SPE S.r.l.. This partnership, which focuses on real estate backed NPLs and UTPs (Unlikely-To-Pay), aims to invest up to €100 million in secured NPEs (Non-Performing Exposures) in the short-medium term.
BCMGlobal has acted as advisor throughout the acquisition process, assisting the partners from the origination and underwriting of the opportunity, to the deal execution. BCMGlobal is also the Special Servicer for the securitization, with 130 Servicing as Master Servicer and Corporate Servicer, Calculation Agent and Representative of the Noteholders.
Legal support to the investors in relation to the transaction documents has been provided by Legance – Avvocati Associati. The valuations of the real estate collateral assets of the NPL portfolio have been provided by Avalon.
Simon Fitness, Chief Executive of BCMGlobal Ireland and Italy said:
“In the last 5 years we have enhanced our proposition and reputation as a special server and real estate asset manager, and this second co-investment further strengthens our commitment in the Italian market.
Following the strong performance of our first co-investment in 2022, we were keen to explore further opportunities to invest. This deal concluded with a leading counterpart such as doValue builds on our experience and expertise in Italy, optimising returns on NPL and UTP secured loans through proactive loan management and utilising our real estate team to support auction facilitation and value-add activities.”
“There remain substantial opportunities in the Italian NPE primary and secondary markets, and we look forward to identifying them as we continue to grow our presence in the industry.”
Paolo Petrignani, Managing Director of Albatris commented
“The acquisition demonstrates our ability to complete complex transactions during challenging market conditions. We look forward to continuing to capitalize on asset backed credit opportunities and special situations in the Italian market together with BCMGlobal and Three Line Capital.”
“This new acquisition confirms the success of our European NPL strategy. By working in concert with Albatris and BCMGlobal, we have been able to establish an ongoing presence in the Italy NPL markets. We look forward to making further investments in 2023 and beyond”
said Benjamin Bornstein, Partner at Three Line.
BCMGlobal today announces the launch of a partnership in Italy with a group of leading international institutional investors including Swedish Albatris in joint venture with U.S. based Three Line Capital. BCMGlobal has co-invested into the securitization from Wings One SPE S.r.l.
This newly launched partnership has completed a first investment in the Italian market by purchasing a secured non-performing loan (NPL) portfolio from a major European financial institution. The partner investors aim to invest up to €100 million in secured NPEs (Non-Performing Exposures) in the short-medium term, focusing on real estate backed NPLs and UTPs (Unlikely-To-Pay).
BCMGlobal has acted as advisor throughout the acquisition process, assisting the partners from the origination of the opportunity, the underwriting and deal execution. BCMGlobal has also been appointed as Special Servicer for the securitization, with 130 Servicing as Master Servicer and Corporate Servicer. In the context of the securitisation transaction, 130 Servicing will also assume the roles of Calculation Agent and Representative of the Noteholders.
Legal support to the investors in relation to the structuring and implementation of the securitization and the co-investment arrangements has been provided by Legance – Avvocati Associati. With reference to the transaction documents, further legal assistance has been provided by Allen & Overy to BCMGlobal. The valuations of the real estate collateral assets of the NPL portfolio have been provided by Avalon.
Simon Fitness, Chief Executive of BCMGlobal Ireland and Italy said,
“Over the last five years, we have built a strong reputation as a special servicer and real estate asset manager in Italy. This new partnership demonstrates our continued commitment to the Italian market and the confidence leading international institutional investors have in us to deliver.
The complexity of the work we undertake on NPL and UTP workout activity together with real estate asset management are much in demand, and the opportunity to establish a long-term relationship with Albatris is a fantastic next step in our growth journey.”
“We are pleased to have completed this milestone acquisition. We believe it will pave the way for other purchases of credit portfolios,” – said Paolo Petrignani, Managing Director of Albatris – “Italy is one of our key markets and we remain committed to further investments.”
Arash Talebinejad, Managing Partner of Albatris commented:
“The transaction is accretive to our credit strategy, as we continue to further capitalize on our strong pipeline of attractive investment opportunities. We look forward to continuing working closely with BCMGlobal to expand further our footprint and provide tailored asset backed credit solutions for prominent financial institutions across the European markets.”
“We are very excited to partner with Albatris on this maiden investment in Italy” said Benjamin Bornstein, Partner at Three Line. “Our years of experience in creating and leading joint venture partnerships allowed us to pursue this opportunity with Albatris and BCMGlobal, and we expect to build on this first acquisition.
The NPL industry has seen a global slowdown in transactions. Banks are now expected to resolve legacy loans ahead of the spike in COVID-related defaults. What does this mean for servicers?
This year’s Global NPL conference took place in early October, welcoming over 500 delegates from 250 companies and 25 countries around the world.
SmithNovak, hosts of Global NPL, expects that a new phase of portfolio transactions is about to begin.
BCMGlobal was premium sponsor of the servicing panel at Global NPL, welcoming four panellists from servicers across Europe.
If you missed the panel, here are some highlights.
The panel first acknowledged that the pan-European servicing market has grown significantly over the last few years.
But servicing remains a ‘local business’, and is most successful when working alongside other local suppliers of expertise. Its local nature is what differentiates servicing in the NPL market.
Servicers win and grow more mandates by using their local tools and resources – but there are still opportunities to go deeper with clients. How can servicers distinguish themselves from utility servicers? Can they transform their capabilities to other markets? For example, BCMGlobal helps private equity firms to access innovative investment opportunities that can grow their business across jurisdictions.
Whether servicers are supporting bank or non-bank originators, it’s their responsibility to find a model that works for them. Larger servicers have access to larger tool kits, so smaller servicers have to find their wins in more unique ways – such as sourcing off-market deals and keeping staff incentivised as roles increase in popularity.
Another key to success when servicing NPLs is deploying specialist teams to achieve the best possible outcomes.
For example, BCMGlobal has a dedicated REOCO team to support our clients throughout the legal process behind the real estate credit bid, the repossession of the asset and all asset management activities.
With reporting activities, servicers should try connect the same teams with the same clients across their multiple jurisdictions so that they receive the same familiar line of communication and reporting.
Another opportunity when servicing default loans is to develop networks with lawyers, evaluators and other stakeholders involved in the process. BCMGlobal works closely with a network of brokers when an asset is being sold consensually with a borrower, or for sale through judicial auction, to achieve the best possible value. We then introduce the real estate asset to our investor network.
The panel agreed that servicers will experience extremes whether they’re small or large. Their advice is to ensure they don’t rely on one stream of capital and to have a diversified client base for stability.
For example, BCMGlobal can support three client types: private equity firms, banks and asset managers. For PE firms, we manage all asset and loan classes while sourcing innovative investment opportunities to grow their business across jurisdictions. We can sell NPEs at the highest possible value for banks and manage their operations in regulated environments, while supporting asset managers through loan management and REOCO services.
Servicers also have an opportunity to cand become an asset owner, as clients will want to stay closer if their ambitions are aligned. Servicers can also add value in a risk-retention role regardless of their size.
Loans in Italy are mostly made up of SMEs, with a small percentage of consumer loans and even less residential.
Since 2016, most deals in Italy have been with large banking platforms who create relationships with investors. But there are now 10 big servicers managing €300bn of assets.
The Italian market is seeing more single-name lateral deals in the secondary market, but servicers need to have plenty of capacity to deal with this. They must work even harder to extract value where single-name tickets are as small as €2-3m. Servicers need to be flexible and often find bespoke solutions for each case.
For real estate collateral, there are opportunities in Italy to co-invest with local developers and high-network individuals. This enables developers to build in bigger, more popular cities where real estate is popular and can be sold for more value.
These 10 big servicers are mostly dealing with traditional activity in these huge volumes of loans. Especially since COVID-19 and court closures, the number of real estate auctions and assets have increased. This is driving the market towards REOCO activities with more focus on the real estate side.
BCMGlobal supports REOCO clients with a steady hand throughout the legal process and complexity surrounding credit bids, repossession and asset management activities. Clients want to protect or add value to their assets, so we participate in real estate auctions during legal procedures and undertake management activities until full resolution – including disposal and sale.
Servicing is a human-intensive industry, but IT can play a role in moving it forward.
For example, many servicers are creating online self-service payment portals for clients – making payments quick, simple and visible. This also enables servicers to trace payments more easily.
. Properly analysing the data available to servicers (including public registers or their clients’) allows them to tune into how people behave and give them the tools to help solve their own problems.
For example, transaction data enables servicers to develop systems that analyse all available data to understand and predict the right prices of sales – therefore extracting the right value.
The panel agreed that progress is being made in the industry here but that there is room for improvement. Human capital will always be a commodity in servicing, but servicers have to evolve and with their clients to fully support them.
Contact us to find out how we can help you.