By Valentina Za and Pablo Mayo Cerqueiro
LONDON (Reuters) -U.S. hedge fund Davidson Kempner Capital Management (DK) said on Friday it had agreed to sell Prelios to fintech firm ION Group, in a long-awaited deal which two sources said valued the Italian credit manager at 1.35 billion euros ($1.5 billion).
DK, which did not disclose the sale price, had been looking for a buyer for years, and held discussions for several months with ION. Dublin-based ION Group was in turn in talks with banks for months to secure funding for the deal.
Founded by former Salomon Brothers trader Andrea Pignataro, ION Group provides services of trading, analytics, treasury and risk management for capital and commodity markets.
Banks are providing roughly half of the funding for the Prelios deal and sources told Reuters in May a compromise solution had been found on the structure of the financing which had proven a hurdle.
The financing consortium was led by UniCredit, Intesa Sanpaolo (OTC:ISNPY) and BNP Paribas (OTC:BNPQY) and also included Banco BPM, Standard Chartered (OTC:SCBFF) Bank and Mediobanca (OTC:MDIBY), DK said.
ION is buying Prelios through its X3 unit.
ION's acquisition comes against a backdrop of rising interest rates, in a challenge for a group known for its aggressive use of debt financing in its growth strategy.
In 2021 in Italy alone, ION bought banking software provider Cedacri for $1.8 billion and acquired Cerved in a deal that valued the credit data and management group at nearly 2 billion euros.
Lazard (NYSE:LAZ) acted as financing advisor to Prelios, while UBS advised ION. BNP Paribas and Mediobanca acted as financial advisors to X3. Goldman Sachs (NYSE:GS) worked with DK.
The Italian market for soured bank credit has stalled after years of tumultuous growth as banks were forced by supervisors to shed some 300 billion euros in impaired loans.
That clean-up process has helped Prelios - led by former Morgan Stanley (NYSE:MS) banker Riccardo Serrini - triple its revenue to over 300 million euros since DK acquired it in 2018.
Careful lending policies and guarantees the Italian state provided to help the economy during the pandemic and the energy crisis are now keeping new impaired bank loans at record lows.