Italian illimity buys loan specialist AREC for 40 million euros EV

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The digital lender and bad debt specialist sees a positive impact on its pre-tax profit of around €8 million in 2023 and around €11 million in 2025 from the deal for AREC, a company focused on business real estate.

AREC is the third largest servicer in the Italian corporate UTP market with €2.1 billion of third-party loans under management and an average gross book value of individual positions of around €30 million, illimity said in a statement.

AREC is currently owned by institutional investors Finance Roma and GWM Group Holding, both with 40%, and Oxalis Holding which holds the remaining 20%.

Challenger bank illimity also recorded a net profit of 15.7 million euros in the first three months of the year, up 25% compared to a year ago.

Italy’s debt collection sector is under pressure to consolidate and cut costs as flows of new bad loans decline after the country’s lenders completed a large-scale balance sheet cleanup.

Illimity plans to integrate its neprix unit into AREC to create a comprehensive player in the service of distressed loans to companies with more than 9 billion euros in loans under management, of which more than 3 billion euros relate to loans to UTP companies.

Illimity will pay for the operation through a capital increase of 36 million euros reserved for AREC while the remaining 4 million euros will be paid in cash.

At the end of the operation, the current shareholders of AREC will indirectly hold approximately 3.4% of the share capital of illimity.

Marco Sion Raccah, current CEO of AREC, will have the same role in the new company resulting from the integration between neprix and AREC.

The closing of the operation is subject to the completion of the authorization process and the meeting of shareholders of illimity on the capital increase planned by the summer.

($1 = 0.9483 euros)

(Reporting by Cristina Carlevaro, editing by Keith Weir)

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