London based Algebris Investments is launching second fund that will invest mainly in non-performing loans (NPLs) of Italian banks, with a focus on loans secured by real estate assets located in Northern and Central Italy.
In October 2014, Algebris launched NPL Fund I, which has invested €400m so far (out of €437m committed) in 36 deals closed with 24 banks. The expertise and track record built with this fund, coupled with the “increased efficiency” of the Italian judicial system, has allowed the asset manager to start up a second fund, Algebris NPL Fund II, that will pursue the same investment strategy as the first one in the NPL market.
Algebris NPL Fund II is a fund established under Luxembourg law intended for institutional investors. The fund will invest in NPL portfolios and single loans of Italian banks via an Italian securitization vehicle, with a focus on loans guaranteed by real estate assets.
The target fund size is €1bn, to be achieved by the end of 2017. The fund has already gathered signed commitments for a total amount of €210m and has visibility on further commitments for a total consideration of €500m from main global institutional investors. The fund has a term of 6 years, including a 3 years investment period.
Algebris NPL Fund II will be managed by Algebris Investments, leveraging on the experience of the founder and CEO Davide Serra, together with the team led by Massimo Massimilla.
“Through our investment in NPLs, we help Italian banks to clean their balance sheets, a condition necessary to re-start lending activity to the real economy and to complete capital increases. With healthier financial statements, banks can more easily begin sector consolidation and cost cutting activity, in such a low interest rate environment characterized by a strong digitalization process,” Serra said.
“From 2008 to 2015 the stock of bad loans of Italian banks has shown an average yearly growth rate of 25%, reaching about €200bn, while ‘Unlikely To Pay’ loans amount to €160bn. If we assume a return to pre-crisis levels, the amount of NPLs that may be sold by Italian banks in the next 3/5 years is about €140bn, of which €65bn are secured. In 2015 we were among the most active investors in the sector and in 2016 we have closed deals for a total nominal,” he added.