Oaktree clinches sale of Italian bank Banca Progetto to Centerbridge

Industry:    2 months ago

Investment firm Oaktree Capital Management has struck a deal to sell Banca Progetto, an Italian specialty finance bank, to funds managed by private equity firm Centerbridge Partners, the lender said in a statement on Wednesday.

Oaktree first invested in Banca Progetto in 2015, when the Italian lender was known as Banca Popolare Lecchese and had a loan book of just 50 million euros ($55 million). That compares with 7.6 billion euros at the end of last year.

Focused on lending to small- and mid-sized Italian businesses, Banca Progetto has increased its business in recent years by focusing on loans guaranteed by the state, which totalled 6.9 billion euros at the end of 2023.

Oaktree first started looking in to liquidating its investment in Banca Progetto three years ago. It has also explored a potential stock market listing in its search for an exit.

Banca Progetto reported a net profit of 72 million euros ($79.6 million) last year. Its return on equity (ROE) of 28% compares with an average of 12.3% for Italian banks in 2023 net of extraordinary items.

Banca Progetto did not disclose the financial details of the sale, in which Morgan Stanley acted as a financial adviser to Oaktree while Kitra Advisory and JPMorgan advised Centerbridge.

Higher interest rates have turbocharged profits at Italian lenders over the past two years, closing the steep discount to book value at which shares of publicly listed banks used to trade.

With a much higher than average ROE, Banca Progetto was valued in the deal at a premium to its book value of nearly 300 million euros, a person with knowledge of the matter said.

Another two people close to the transaction said the bank fetched a price of more than 500 million euros.

Centerbridge, which manages $38 billion in capital across the private equity, private credit and real estate sectors, had previously invested in the Italian financial sector by acquiring a stake in BFF, another specialty finance bank.

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