Oaktree hires Morgan Stanley to find investor in Italy’s Banca Progetto – sources

MILAN, Feb 22 (Reuters) – Oaktree has hired Morgan Stanley (MS.N) to sell a stake in Banca Progetto in a deal that could value the challenger bank up to $565 million, one of biggest deals in the burgeoning Italian digital banking industry, sources told Reuters.

The US investment firm launched Banca Progetto, which has 4.6 billion euros ($5.2 billion) in assets, in 2015 after buying 54.2% of small local bank Banca Popolare Lecchese to Nuova Banca Etruria, which was being liquidated.

The deal saw Oaktree enter the Italian banking market just as the government stepped in to rescue four smaller banks, one of which was Etruria, ushering the industry into a long phase of restructuring that saw a series of bank failures .

Oaktree has since worked to revive Progetto by transforming its lending business into digital and is now seeking offers valuing the bank at ten to more than 12 times its 2021 profit of 41 million euros, the sources said.

Two of the sources said Oaktree was targeting a price of €400m for the asset, while a third source said the California fund was targeting a valuation above €500m.

A separate source said there had been contact with Italian bad debt specialist Prelios, whose US fund owner Davidson Kempner Capital Management is also looking for a buyer, but talks had not progressed. .

Morgan Stanley, Banca Progetto and Prelios declined to comment.

Under Paolo Fiorentino, a longtime UniCredit director and former Carige chief executive, Progetto nearly doubled its profit in 2021.

Its business loans rose to 2.2 billion euros, helped by strong demand for loans backed by state guarantees during the pandemic.

Progetto also offers salary-backed personal loans, like rival IBL, which in 2015 withdrew its enrollment plans at the very last minute.

Challenger banks or neobanks, which compete with established banks often by specializing in niche markets, developed late in Italy compared to more dynamic markets such as Great Britain.

In 2020, Progetto became the first Italian bank to obtain authorization from the central bank to outsource its entire IT system, concluding an agreement with Amazon Web Services for cloud infrastructure.

($1 = 0.8827 euros)

Reporting by Valentina Za and Elisa Anzolin in Milan and Pamela Barbaglia in London; Additional reporting by Andrea Mandala; Editing by Jan Harvey

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