Fortress Investment Group LLC (FIG) announced the signing of an agreement with the Italian bank UniCredit SpA. Per the deal, the company would take over UniCredit’s bad loan unit.
According to a Bloomberg article, Fortress is likely to shell out $601 million for purchasing UniCredit Credit Management Bank SpA (“UCCMB”) − the bad loan management unit of UniCredit – along with a pool of other non-performing loans. Further, the company would partner with Italian asset manager Prelios SpA, to carry out the servicing of some non-performing loans.
As disclosed earlier, UCCMB would not require the removal of any of its existing 700 employees and will continue to operate in Verona, Italy, and Charles Spetka. The deal is expected to close in the second quarter of 2015. Other financial details were, however, not divulged.
European Central Bank’s recently announced quantitative easing program is expected to boost the Euro-zone economy, and positively impact Italian markets in 2015 and 2016. Further, Bank of Italy raised its growth forecast for Italy to 0.5% for 2015 and 1.5% for 2016. These reflect an upcoming recovery in the Euro-zone.
Hence, we believe, the latest move by Fortress marks a well-timed investment in an almost bottomed out market which is on its way to recovery. The deal will not only make the servicing of loans easier for the company, but also help broaden its footprints and build a diversified platform.
Notably, Fortress has also entered into a partnership with Iccrea Holding for managing troubled loans of a group of small Italian cooperative banks, through Italfondiario, an Italian debt collector controlled by Fortress.
However, though the deal seems lucrative and potentially beneficial, we remain apprehensive about the stock. The company’s performance lagged the expectations in third-quarter 2014, and tables are not expected to be turned anytime soon.
Fortress currently holds a Zacks Rank #5 (Strong Sell). Some better-ranked investment bankers are Affiliated Managers Group Inc. (AMG), PennantPark Floating Rate Capital Ltd. (PFLT) and Woori Bank Co., Ltd. (WF). All these stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment