Tuesday 19 September 2017

Blackstone swoops in on record Spanish debt sale

Banco Popular
Banco Popular
Donal O'Donovan

Donal O'Donovan

Banco Santander has agreed to sell a majority stake in €30bn of distressed property assets it picked up as part of the rescue of Banco Popular to Blackstone Group, setting in motion Spain's biggest-ever real estate deal.

The deal draws together key players from the post-crash market for Irish distressed debt.

The current valuation for the Spanish assets is about €10bn, Santander said in a statement. Blackstone will own 51pc of a new company set up to manage the assets and Popular, now part of Santander, will own the rest, the lender said.

Bloomberg reported last month that Santander was seeking to sell the stake after it agreed to buy Popular in June.

Santander stepped in to rescue Popular in June in a sale forced by the European Single Resolution Board, an agency set up to manage bank failures after the great crash. By selling the Popular assets, Santander Chairman Ana Botin is making good on a pledge to rapidly sell off the toxic assets stemming from Spain's property crash that brought about Popular's downfall.

"The transaction is good for the sector more broadly," said Neil Smith, a banking analyst at Bankhaus Lampe in Dusseldorf, Germany, who has a sell rating for Santander. "It shows there is plenty of appetite for this type of asset."

Selling the portfolio stake will have a positive impact on Santander's CET1 fully-loaded capital ratio of 12 basis points, the lender said.

The valuation is consistent with what Santander made provisions for when it purchased Popular so the transaction won't generate any material gain or loss.

The portfolio also includes all of Aliseda, Popular's real estate manager, which will be transferred to the new company.

Santander took a 49pc stake in Aliseda as part of the Popular deal and agreed to buy the rest of the asset manager from Kennedy Wilson and Varde in July.

Blackstone and Kennedy Wilson were prolific investor in Ireland after the 2008 crash and along with other US private equity firms have expended out into continental markets. (Additional reporting Bloomberg)

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