MILAN, 24 January (Reuters) – UniCredit (CRDI.MI), according to two sources, is considering five offers that are not binding for certain parts of its leasing operations. CEO Andrea Orcel focuses his attention on businesses that don’t tie up capital.
Orcel announced a new strategy Dec. 9 that would generate sufficient capital to return 16 million euros ($18 billion to investors) in dividends or share buybacks until 2024.
Former UBS banker, he said UniCredit would place bets on businesses that would maximize return on capital (ROAC).
This is not true for the leasing industry. Reuters reported that Italy's second-largest bank in terms of assets was looking into a sale. Continue reading
UniCredit received five offers that were non-binding, just before Christmas, after inviting approximately 50 investors to take a look at the business. 16 of these responded, according to one source.
According to two sources, the bidders were private equity firms Bain and Christofferson Robb & Co. (CRC), and two foreign players in the leasing industry.
One source said that Italy's Alba Leasing is interested in the deal. It is owned by rival banks like Banco BPM and BPER (EMII.MI), but it might need to raise capital first.
UniCredit declined to comment, as did Bain. CRC and Alba Leasing couldn't be reached.
UniCredit Leasing holds around 10 billion euro in credit, with around 500 million euros net of writedowns.
The portfolio consists of more than two-thirds of the real estate leasing contracts and the remainder relating to equipment.
One source said that the equipment component is the most popular with industry players.
Sources said that none of the bids were for the entire business. However, UniCredit could decide to sell off parts of it depending on how much it is willing to lose.
UniCredit calculated a 700m euro hit for the plan's length from sales of noncore assets, using an accounting principle called IFRS5.
According to the second source, private equity firms are interested in the loan portfolio. UniCredit's current rate of return is slightly less than 1%. To offload it, UniCredit would need to offer a discount to guarantee buyers a higher yield.
Sources said that UniCredit, which works with PwC to sell the company, could eventually reject a deal.
UniCredit Leasing doesn't have a significant presence on car leasing. However, this niche is very attractive and Societe Generale (SOGN.PA), ALD car leasing division ALD agreed to buy Dutch rival LeasePlan.