US fund Apollo Global Management has offered to buy a controlling stake in Italian bank Carige by acquiring the bulk of a €550mn ($559mn) share issue, the lender said yesterday.
Confirming Italian press reports, Carige said Apollo would buy €500mn worth of new stock, with the remaining €50mn offered to existing shareholders. The Genoa-based lender has a stock market value of €478mn, so the deal would give Apollo a majority stake.
Saddled with bad loans and weak profitability, Italian banks are bracing for a wave of consolidation and a shake-up of their investor base after last week’s merger between Banco Popolare and Banca Popolare di Milano.
That deal was the first tie-up following a 2015 government decree intended to encourage banking mergers.
Carige’s stock rose 6.2% to €0.6080 by 0911 GMT.
Apollo has also offered to buy Carige’s non-performing loans (NPLs), which were worth a gross €3.5bn at the end of 2015, the bank said without saying how much the fund would pay.
Two sources close to the matter said Apollo had bid €695mn for the NPLs. This would force Carige to book additional write-downs of €691mn, so Apollo is in effect offering to plug most of that loss via the share issue.
The European Central Bank has told Carige to examine Apollo’s proposal, one of the sources said, adding the deal would “resolve all of Carige’s problems. It cleans up the balance sheet and recapitalises the bank.”
The ECB declined to comment. Apollo did not reply to an e-mail requesting comment.
The bank said it would be up to its new board, to be appointed at a shareholder meeting tomorrow, to assess Apollo’s proposal. It said the US fund had presented the revised, non-binding offer in a letter dated March 23, after the bank’s board shunned a proposal submitted on February 10.
It was not immediately clear whether under Italian rules Apollo would have to launch a mandatory bid for Carige’s outstanding stock, or whether the deal would be considered a rescue, exempting the fund from such an obligation.
Apollo had already bought Carige’s insurance units in 2014 after the Genoa-based bank emerged among the weakest lenders in a eurozone health check of the sector.
Its top shareholder is local entrepreneur Vittorio Malacalza with 17.6%. Malacalza has pushed for management change at the bank and his own candidate, Guido Bastianini, is set to be appointed chief executive.