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February 23, 2022

Oaktree mulling to divest stake in digital lender Banca Progetto

US-based investment firm Oaktree is looking to dilute its stake in Italian digital lender Banca Progetto, Reuters reported citing sources.

Oaktree has hired investment bank Morgan Stanley to assist it in the divesture, which could value Banca Progetto up to $565m. 

Oaktree could price the assets for sale at $453.54m, two of the sources told the news agency, while a third source said that the American investment firm is looking to raise around $565m from the deal. 

Banca Progetto was launched by Oaktree in 2015 after it acquired a 54.2% stake in small local peer Banca Popolare Lecchese from Nuova Banca Etruria.

The deal marked Oaktree’s foray into the Italian banking space at a time when the country’s government rescued four small banks including Etruria.

As per the report, the valuation demanded by Oaktree is around ten to 12 times more than Banca Progetto’s 2021 profit, which stood at $46.48m. 

Oaktree worked to re-launch Banca Progetto by digitising its lending business, which had almost doubled its profits in 2021 under the leadership of Paolo Fiorentino.

Its loan business is said to have grown to $2.49bn due to the strong demand, with state guarantees on loans.

In 2020, Italy’s central bank authorised Banca Progetto’s deal with Amazon Web Services on cloud infrastructure, making it the first bank to secure such approval.

There had been talks with bad loan specialist Prelios too, but the deliberations did not proceed, a separate source said adding that Prelios’ owner US fund Davidson Kempner Capital Management is also looking for a buyer.

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