By Valentina Za
MILAN (Reuters) – UniCredit is weighing around five non-binding offers for parts of its leasing operations, two people close to the matter said, as CEO Andrea Orcel focuses on businesses that don’t tie up much capital.
In a new strategy on Dec. 9, Orcel pledged to generate enough capital to return 16 billion euros ($18 billion) to investors in dividends and share buybacks through 2024.
The former UBS banker said UniCredit would bet on businesses that would help it maximise return on allocated capital (ROAC).
That is not the case for the leasing business, and Reuters first reported in October that Italy’s second-biggest bank by assets was exploring a possible sale.
After inviting around 50 investors to look at the business of which 16 responded, UniCredit just before Christmas received around five non-binding offers to which it is yet to reply, one of the sources said.
The bidders are private equity firms Bain and Christofferson Robb & Co (CRC) and two foreign leasing industry players, the two sources said.
Italy’s Alba Leasing, owned by some rival banks such as Banco BPM and BPER, is also interested, one of the sources said, adding it may need to raise capital first.
UniCredit and Bain declined to comment. CRC and Alba Leasing could not be reached.
UniCredit Leasing has around 10 billion euros in credit on its books, including around 1 billion euros of non performing debt – or 500 million euros net of writedowns.
Over two thirds of the portfolio is made up of real estate leasing contracts, with the rest relating to equipment.
The industry players are mostly interested in the equipment part, one of the sources said.
None of the bids was for the whole business, the sources said, adding UniCredit may decide to divest only parts of it, depending on the size of the loss it was willing to bear.
In December, UniCredit calculated a 700 million euro hit over the plan’s duration from sales of non-core assets under an accounting principle known as IFRS5.
Private equity suitors are interested in the loan portfolio, the second source said. However, its current rate of return is just over 1%, meaning UniCredit would incur a significant loss to offload it because it would have to offer a discount to guarantee fund buyers a higher yield.
UniCredit, which is working with PwC on the sale, may eventually decide against a deal, sources said in October.
UniCredit Leasing does not have a significant presence in car leasing, an attractive niche which this month saw Societe Generale’s car leasing division ALD agree to buy Dutch rival LeasePlan for 5 billion euros.
($1 = 0.8841 euros)
(Additional reporting by Steve Jewkes and Elisa Anzolin; Editing by Mark Potter)
