Blackstone Buys CatalunyaCaixa Mortgages for EU3.6 Billion

Jul 17, 2014 4:44 am ET

(Updates with official confirmation and value of the transaction from first paragraph.)

July 17 (Bloomberg) -- Blackstone Group LP, stepping up bets on Spain’s economic recovery, is buying about 6.4 billion euros ($8.7 billion) of mortgages from CatalunyaCaixa SA for 3.6 billion euros.

Blackstone was the winner in the process known as “Hercules” that began in April, Barcelona-based CatalunyaCaixa said in an e-mailed statement today. As many as 12 funds participated in the initial round and four groups presented binding offers, the lender said.

FROB, the state bank rescue fund that controls Spanish lenders nationalized in a process that led the country to seek 41 billion euros in European bailout funds in 2012, is now seeking a buyer for CatalunyaCaixa after cleaning up its balance sheet. Today’s sale of the mortgage portfolio bolsters the lender’s capital ratios and allows the sale process to go ahead, the bank said.

The transaction includes transferring the mortgage portfolio to a securitization fund for an amount equal to the 4.2 billion-euro book value of the loans. Blackstone will pay 3.6 billion euros and FROB will contribute 572 million euros, FROB said in an e-mailed statement.

The assets sold to Blackstone consist mostly of residential mortgages concentrated in the region of Catalonia, according to a sale document for the portfolio seen by Bloomberg News.

Cerberus Capital Management LP, Goldman Sachs Group Inc., Lone Star Funds and Oaktree Capital Group LLC were also among investors that took part in the bidding, people familiar with the sale said July 2.

George Soros, Apollo Global Management LLC and Goldman Sachs are among investors trying to snap up financial assets in Spain as the economy emerges from a six-year economic slump.

A unit of Cerberus bought Bankia SA’s property-servicing arm last September, while Apollo has bought Altamira, the real- estate servicing platform of Santander, and also acquired an 80- branch bank hived off from the bailed-out Galician lender NCG Banco. Blackstone last year agreed to buy a group of Madrid apartments for 125.5 million euros.

Bids for CatalunyaCaixa are due tomorrow and FROB aims to complete the sale by the end of the month, according to the FROB spokeswoman. Banco Santander SA, CaixaBank SA, Banco Bilbao Vizcaya Argentaria SA and Societe Generale SA are among banks that may bid, Spanish newspaper Expansion reported July 3.

After the deal announced today, the bank’s capital ratio known as CET1 is 14.9 percent with a 81.6 percent coverage ratio, CatalunyaCaixa said.

--With assistance from Charles Penty in Madrid.