Dear friends, after more than six years of news, in-depth analysis and numbers, I thought that sometimes a few comments are due. So here I am, on the eve of the holidays inventing this column. But the enthusiasm immediately met with a problem … How do I call it?
On the fly I wrote a whatsup yestraday to my friend Gianluca Billo, who, as managing director of Nomen Italia, does that for a job: he invents names. He does for new companies and for new products or services. He had helped me find the name BeBeez in early 2013 and I’ll always be grateful to him, because it seems that it turned out to be really well chosen. And to those who still wonder what BeBeez means, you can read it here.
To make it short I told Gianluca that in this column I will say what struck me for good or bad in the past week, both in terms of news and in terms of people met, and that I will also say what I expect can be interesting to keep an eye on during the coming week. It will not necessarily be a spiky column as it fits to a bee, but sometimes it could be. I also told him that it will be written in a colloquial manner and that I wanted the name of BeBeez to be found at least in part. This is how the name Beez Peak was born. On the one hand the English word “peak”, meaning the most interesting things of the week, which also sounds like “pick” or selection but also as “peek” meaning a look , and sounds also like BeeSpeak, that is the speaking bee. What do you think?
Names aside, in this holiday prelude it seems clear to me that we are all trying to close all the pending deals before running away under the beach umbrella. Starting with the international giants, who have waited until the end of July to announce mega-transactios. From the merger London Stock Exchange-Refinitiv, which, if it goes through, will see the consortium led by Blackstone become the main shareholder of the new group, at the launch of Softbank‘s second Vision Fund, which starts with $ 108 billion in commitments and not it’s over here (see here a previous post by BeBeez).
As for Italy the big deals are seen recently in the non-performing loan market, where several transactions on large portfolios were recorded and where many other deals of even more important dimensions are coming, at least for 45 billion euros, with the credit servicers that are particularly sensitive to what is said of their capacity to collect credits. Proof of this is the success of Prelios’ Linkedin post on Saturday 27 July, which referred to my survey on this very topic, published by Milano Finanza. Subscribers to BeBeez News Premium were able to read in preview my article on July 23rd here as well as have been able to read the BeBeez Report on the first seven months of deal on the Npl published on July 22nd here (all the info to subscribe here).
There are no official data on how Italian NPEs recoveries are going, they exist only for deals made through public securitizations and in particular with the Italian public guarantee Gacs. For the rest, we must rely on the profitability data of the servicers and recovery companies, given that a large part of their income statement depends on the commissions they collect based on how much they recover. The PwC ranking of the servicers reworked by BeBeez based on the ebitda margin has given interesting surprises. The ebitda margin calculated for 2018 is above 40% for as many as 6 servicers (Frontis Npl, Duepuntozero, Phoenix Asset Management, J-Invest, MBCredit Solutions and Prelios Credit Servicing), with Credito Fondiario that with its 39.7% heels the leading group closely. The ranking, however, is incomplete, because the numbers of some of the most important servicers like Intrum and Hoist Finance are missing, while Banca Ifis is not listed as a group (only the subsidiary FBS is in PwC’s ranking) because it is not a servicer, although it is one of the largest Italian Npl buyers. In any case, these are numbers that indicate that the servicers ire working well on the recovery front, otherwise those margins would not have been able to be taken home.
Apart from the superactivity of servicers and non-performing loans investors, private equity and private debt funds are no less. In this July, BeBeez counted 34 transactions involving private equity investors buying or selling Italian companies, after the 119 deals announced in the first six months of the year (see here BeBeez Report for six months of private equity deals) , compared to the 188 deals registered in all 2018. In the last few days the final closing of two funds was announced. These are Progressio Investimenti III, at 250 million euros, and Wisequity V at 260 million.
A curiosity. It will be Summer, but it seems that in these days fruit is the most popular. Progressio sgr bought a few days ago the majority of Damiano spa, a Sicilian company leader in the production of organic products based on dried fruit (see here a previous post by BeBeez). On the market there is currently the producer of dried fruits Besana, which is looking for a new financial partner to grow abroad, especially in Northern Europe and Asia, and for this it has given Ubs an exploratory assignment (see here a previous post by BeBeez). Who knows if Progressio wants to do an encore? The Damiano development plan, in fact, also envisages opportunities for growth through external means, through possible acquisitions aimed at strengthening the product offer. Meanwhile, over the past few weeks, the fruit processing machine manufacturer ABL was bought by the US group Gulftech International. Sellers were the Ascari family and NEIP III Sicaf , the Italian SME investment company of the Finint group, which has Itago as an advisor, an independent company controlled by Finint’s former private equity team (see here a previous post by BeBeez). Speaking again about fruit and in particular of machinery for peach and apricot pitting, a week ago CTI FoodTech listed its first minibond on the ExtraMot Pro market, which was entirely subscribed by Banca Sella (see here a previous post by BeBeez).
Keeping on focusing on the private debt market, two concurrent interesting initiatives are to be mentioned. Last Friday July 26th Fondo Strategico Trentino Alto Adige, managed by Finint sgr, announced it has subscribed the so-called Trentino Minibond, a 10.2 million euro basket bond that brings together in one basket nine minibonds issued by nine SMEs based in the Trentino Region and associated with the local association of entrepreneurs (see here a previous post by BeBeez). While at the beginning of July the first short-term basket bond dedicated to the coastal tourist district of the Veneto Region was launched. The bond is the result of the collaboration between Confcommercio Veneto, Confturismo Veneto, Fidi Impresa and Turismo Veneto and Frigiolini & Partners Merchant, the latter advisor, arranger and global coordinator of the deal that has already involved 20 SMEs and aims for an issue total of over 5 million euros (see here a previous post by BeBeez). Is it the beginning of a trend? Unlike the previous basket bond deals (the two Hydrobonds, the Elite Basket Bond and the Export Basket Bond), which were of quite a bigger size, in the latter two cases there was no securitization spv acquiring the underlying minibonds and these are more flexible structures, more suitable for emissions than small size.
With regard to private debt, one last consideration. I did not understand how the so-called Panda bonds that will be issued by Cassa Depositi e Prestiti (Cdp), the Italian National Promotional Institution, will work (see here a previous post by BeBeez). It’s clear that Cdp will cash in the equivalent of 650 million euros bond proceeds, that Chinese investors are going to buy those bonds as they will be denominated in renmimbi, probably the major investor will be the same Bank of China that has signed an agreement with Cdp last March to support Italian companies will to grow in China. But then how do those companies will obtain funding from Cdp? Will Cdp directly invest and/or finance those companies or it will act through its investment company Simest or maybe through the new Fondo Innovazione that is going to be structured by the Italian Government to support venture capital investments? Will the Panda bond regulation bind Cdp to invest the proceeds only in Italy-China projects? All this is not yet clear but we trust that it will be soon.