Algebris Said to Be Winning Bidder for Banco BPM Bad Loans

Algebris Investments reached an agreement to buy non-performing loans with a face value of about 750 million euros ($838 million) from Italian lender Banco BPM SpA, according to people with knowledge of the matter.

The investment company offered to pay about 35 percent of the portfolio’s gross book value, said the people, who asked not to be identified because the transaction is private. It beat off separate offers from Blackstone Group LP, Bain Capital Private Equity LP and Cerberus Capital Management LP, the people said.

The deal, dubbed Project Rainbow, comprises about 40 secured loans backed by real-estate assets including Villa Igiea, a luxury hotel on the island of Sicily, the people said. Chief Executive Officer Giuseppe Castagna is shedding bad debts to curb risk and to boost the Milan-based bank’s capital levels.

Banco BPM, Italy’s third-largest lender, may announce the sale after a board meeting on Tuesday, the people said. A spokeswoman declined to comment on the sale.

An Algebris official declined to comment on the sale. Representatives for Bain and Cerberus declined to comment on the companies’ offers. A Blackstone spokesman said he wasn’t immediately able to comment.

Banco BPM shares reversed intraday losses Friday afternoon and closed almost 3 percent higher at 2.85 euros.

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