Algebris acquires €693m Project Rainbow

The portfolio of NPLs is secured against mortgages originated by Italian bank Banco BPM.

London-based asset manager Algebris has agreed to a acquire a portfolio of non-performing loans (NPLs) secured against mortgages with a gross value of €693 million from Italian bank Banco BPM.

The portfolio – titled “Project Rainbow” – is a group of loans secured against commercial, tourist, and residential properties.

The loans will be transferred into an SPV managed by Algebris. The transaction is expected to close by the end of June.

Algebris chief executive Davide Serra said that “Banco BPM oversaw a professional and rigorous competitive process. Investing in NPLs allows banks to clean up their budgets, which is necessary for them to continue their lending to the real economy.”

Banco BPM is aiming to sell up to €8 billion of NPLs by 2019 under its de-risking programme established following the merger between Banco Popolare and Banco Popolare di Milano last year.

In a statement, the bank said it had obtained a good price for Project Rainbow. “The valuation assigned to the sold loans is well above that envisaged under the Strategic Plan.”

Banco Akros and KMPG served as financial advisers on the deal. Studio Chiomenti worked as the legal adviser.

Algebris is aiming to raise €1.25 billion on a final close for its second NPL investment fund at the end of this year, according to the firm’s latest release. The firm invests in loans secured against real estate assets and is aiming to achieve a preferred rate of return of 8 percent.

Banco BPM declined to comment further on the transaction. A representative for Algebris did not respond to a request for further comment before press time.