UTPs Credit Fund
These are closed-end reserved funds aimed at investment in secured and unsecured Unlikely To Pay conferred (or acquired) by banks and / or servicers.
For the success of these funds, the SGR exploits its know-how of the distressed assets market and the knowledge of the instruments provided for by the Bankruptcy Law.
This type of fund is an alternative available to banks for the proactive and professional management of the amount of critical loans that require non-judicial management or in any case that are different from NPLs. They are useful in the context of banks’ deleveraging and derisking operations, in which they do not have the tools to make the most of them, due to:
- the impossibility of investing new financial resources (although in some cases they are already available to the company in crisis);
- the impossibility for the company in financial crisis to access new external finance for the completion of the works;
- the presence of executive / conservative deeds and registration of collaterasl for the creditors of the company that prevent the transfer.
These are reserved closed-end funds that can be established through the contribution of real estate, real estate rights or mortgage loans instrumental to the purchase of properties, conferred to the fund in the context of insolvency procedures and crisis situations.
Crisis situations of real estate companies, deriving from financial stress and / or industrial problems, normally lead to insolvency proceedings in which it is very difficult to value real estate assets for various reasons, including:
- the impossibility of the procedure to invest new financial resources (even if these resources are already available to the company in crisis);
- the impossibility for the company in crisis to access new external finance for the completion of the works;
- the presence of executive / conservative deeds and registration of guarantees the creditors of the company that prevent the sale or splitting of the properties for sale.
In all these situations – and in particular where there is a need to make investments, even minimal, necessary to make the properties salable (e.g. in projects at an advanced stage of development) – it could be useful, for the best satisfaction of the corporate creditors, transfer the properties to a closed-end real estate fund, already existing or established for the purpose, which may be in a position to make the investments necessary for the development and manage the properties for the purpose of a better valorisation of the same and therefore greater “recovery” for creditors.
This type of fund can:
- issue shares in correspondence with the contribution of the properties;
- raise new finance by issuing new shares, in order to support the investment plan and enhancement of the fund;
- allow the use of a modest debt depending on the capacity of the real estate values released from mortgage guarantees that would be canceled as part of the transaction;
- proceed with an independent and professional management of the real estate portfolio in order to enhance and optimize the liquidation of the same for the benefit of all investors participating in the fund.
This product is an alternative option dedicated to financial operators who prefer to find a strategy for the valorization of NPLs, rather than simply selling them to third parties or completely internal management.
This solution makes it possible to keep the operators involved together with the investors in the operations to enhance the loan portfolios and real estate assets.
These funds aim at managing all the necessary activities for the repossessing of the real estate assets underlying the credits, providing the investors an efficient platform to deploy the assets recovery.
The REOCO fund can invest:
- into real estate assets;
- both into notes (Asset – Backed Securities) and secured credits for a maximum of almost half of the fund’s assets (49% of the NAV).
The fund is not subject to any taxation on capital gains and institutional investors will only pay taxes at the final dividend distribution (on a withholding tax basis).
The REOCO fund could be directly involved into the secured loan purchase and not only in the repossessing phase.
Special Sits PE Fund
These are reserved closed-end funds that are will be focused on the purchase of majority equity stakes in SMEs that, despite a good P&L, are in financial troubles or other special situations, such as, by way of non-exhaustive example:
- recovery plan pursuant to art. 67 L.F., debt restructuring agreement pursuant to art. 182-bis and ss. L.F.;
- arrangement with creditors pursuant to art. 160 and ss. L.F.;
- provisional exercise of bankruptcy, extraordinary administration or compulsory administrative liquidation, voluntary liquidation;
- other particularly complex situations that are an obstacle to normal business management (management deadlock, disputes between shareholders, etc.).
These are closed-end reserved funds that are dedicated to the securitization of both secured and unsecured NPLs and UTPs credits pursuant to Italian law (law 130/1999).
For this type of product, the core skills of Europa Investimenti and Arrow Global and the know-how acquired in similar operations over the years can be crucial.
These funds invest according to the Italian law on securitisations (law 130/1999) in both secured (mortgage) and unsecured NPLs and UTPs.
The non-performing loans underlying the securitization operation may derive from insolvency proceedings or other difficult / crisis situations.
The fund will be subject to asset allocation criteria and concentration limits on the individual securitization.