Trio snaps up €495m Romanian NPL portfolio

AnaCap, HIG and Deutsche Bank have acquired a portfolio of non-performing and underperforming real estate loans in Romania’s biggest deal of its kind, and one which suggests investment groups are looking further afield for attractive opportunities.

AnaCap Financial Partners, Bayside Capital, and Deutsche Bank have together acquired a €495 million portfolio of Romanian loans, the trio confirmed today in a statement.  

The portfolio consists of 3,566 non-performing and under-performing loans secured against residential and commercial real estate and development land.  

It was sold by Volksbank Romania, which like many banks in Europe is seeking to restructure and divest non-core or non-performing assets in order to comply with the new capital adequacy regime.  

Volksbank Romania is own by partly-nationalised Austrian lender Volksbanken, although its parent must divest its stake (already written down to zero) in the Romanian bank by the end of next year as a condition of the state support it received during the financial crisis.  

The deal is understood to be the largest in Romania to date. The size of the discount was not disclosed. APS Romania will act as servicer for the loan portfolio.  

Private equity firm AnaCap and HIG (through its Bayside Capital unit) have been highly acquisitive in the European NPL market. AnaCap bought a €700 million loan portfolio from UniCredit earlier this year, while Bayside purchased an Italian NPL portfolio from Cassa di Risparmio di Ravenna last month. This deal suggests investment groups targeting NPL portfolios are now looking beyond core European markets like Spain and Italy for opportunities on the European periphery.  

Bayside Capital's London-based managing director Ahmed Hamdani said: “Romania is one of the places that's less picked over. The fundamentals are under-writeable. Even in Spain the very easy trades are [already] done. Pricing expectations have changed. A lot of stuff is beginning to happen in Eastern Europe now [where] Austrian banks are over exposed. Not everyone is looking at Eastern Europe. We’ll run a bit to beat the rush; a rush will reset the price”.

The deal is Bayside's eleventh real estate transaction in Europe since the start of 2013, the firm said. 

Justin Sulger, head of AnaCap Credit Opportunities team, said in a statement: “The portfolio is backed by a wide variety of real estate assets, requiring a range of resolution strategies, which necessitate a deep understanding of consumer and corporate debt in local markets and a highly analytical approach to valuation and on-going management.” 

Speaking in March when the sale first came to public attention, Volksbank Romania president Benoit Catel said: “This transaction further de-risks the business, and results in a cumulative 93 percent reduction of our real estate non-performing loan portfolio. We continue in parallel to focus on growing the profitable core of our business.”