Deal in Focus: PE kickstarts Italian banking consolidation with ICBPI deal

After a competitive process, triggered late last year, the private equity consortium acquired ICBPI in June in a transaction worth up to €2.15bn. Following completion of the deal, ICBPI – which provides credit cards and banking services including e-commerce and pensions – intends to grow both organically and via bolt-on acquisitions. The Milan-based company currently has a headcount of 1,900 and generated a turnover of €670m in 2014 with EBITDA of €195m.

Bain and Advent were rumoured to have joined the race for ICBPI in February, as the Italian government was in the process of ratifying new banking regulations that would see the country's largest banks transformed into joint stock companies. The law removed the one-vote-per-shareholder structure of the 10 largest players in the sector, paving the way for mergers and acquisitions. The reforms have played a role in the timing of the ICBPI sale process, unquote" understands.

Competitive process
As news of the sales process spread, numerous global private equity firms became linked with the company; Lone Star Funds and Apax Partners reportedly withdrew from the bidding process in March. Reports suggest Advent, Bain and Clessidra's closest rivals were US firm Hellman & Friedman and two other private equity consortiums – the first consisting of CVC Capital Partners and Permira, while the second comprised BC Partners and Cinven.

Despite the fierce competition, the transaction was completed within a few months of the consortium joining the running for the company. Advent, Bain and Clessidra entered into exclusivity for ICBPI in May, reportedly tabling two bids for the banking services business. The first offer, valuing the business at €2.15bn, is reportedly subject to regulatory approval of a €1bn debt package. According to Reuters, leverage could be wholly provided via a bond issue with Goldman Sachs "well positioned" to lead the deal. Should this not be approved, a second all-equity deal valuing the business at €2bn will come into play.

The deal is indicative of potential benefits from the reforms pushed for by Italian prime minister, Matteo Renzi; on this evidence, international investors appear keen to pump cash into the country's banking sector. Credito Valtellinese, which was the largest shareholder in ICBPI, said it stood to make a profit of €217-247m on its investment, depending on the final deal structure. Banca Popolare dell'Emilia Romagnia also stated it expects to make a profit of €149-162m. The selling shareholders – which also include Banco Popolare, UBI Banca, Popolare di Milano and Carige – have reinvested for an 8% stake in the business.

Friends reunited
The partnership between Bain and Advent is unsurprising, given the firms have previously joined forces for numerous investments within the sector. In March 2014, the pair wholly acquired Danish payment services provider Nets alongside ATP Private Equity Partners in a DKK 17bn deal. They are also joint investors in London-based payment-processing company Worldpay, which is reportedly preparing for a £6bn IPO on the London Stock Exchange.

However, the involvement of local player Clessidra is also of particular note. The firm does not have an extensive track record in the banking sector; although it did previously acquire Anima Holding, a provider of financial asset management services that floated in April 2014 with a market cap of €1.26bn. More importantly, Clessidra's involvement guarantees a continued Italian backer and makes the high-profile deal more palatable from a political standpoint.

It remains to be seen what the knock-on effect of a consolidated banking sector might have on the Italian private equity market. Should new, larger players shift their approach from asset-backed lending towards cashflow and expected profitability it would mark a welcome evolution in the Italian financing landscape.

Advisers
Equity – Rothschild (Corporate finance); HSBC (Corporate finance); Vitale & Associati (Corporate finance); Bonelli Erede Pappalardo (Legal); Studio Carbonetti (Legal); Carlo Pavesi (Legal); Weil, Gotshal & Manges (Legal); Studio Pirola and Studio Vitali (Tax); Romagnoli (Tax); Piccardi (Tax); Franco Bernabè (Commercial due diligence); Boston Consulting Group (Commercial due diligence); First Annapolis (Commercial due diligence); PwC (Commercial due diligence).

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• Topics
• Buyouts
• Southern Europe
• Financials
• Deal in focus
• Italy
• Clessidra Capital Partners
• Bain Capital
• Advent International
• Unq2015July