US fund Apollo presents rescue plan for Italy’s Carige

US fund Apollo presents rescue plan for Italy’s Carige

MILAN: US private equity fund Apollo Global Management has presented a draft rescue plan for Italy’s troubled bank Carige, three sources close to the matter said.

Meanwhile, Italian banks are considering whether they could step in to plug Carige’s entire capital shortfall, the head of a deposit guarantee fund made up of all of the country’s banks said on Wednesday.

Carige, which was placed under special administration by the European Central Bank in January, has a capital shortfall of 630 million euros ($706 million).

Carige’s temporary administrators have been trying to find a buyer for months but their efforts were thrown into disarray last month when BlackRock pulled out of a proposed rescue plan. That plan included the conversion into equity of a 320 million euro bond held by the FITD deposit guarantee fund.

Two of the sources said on Wednesday Apollo, which already owns Carige’s insurance units, had presented its offer through Italian broker Equita, which is acting as its adviser.

Salvatore Maccarone, who heads the FITD fund, said it had received an offer by an unnamed party, but it was still at such an early stage that the fund could not assess it.

Apollo was not immediately available for comment.

Italian newspaper Il Messaggero said on Wednesday the offer by Apollo called for a capital increase of 450-500 million euros, of which the US fund would cover around 120-130 million euros.

The banks would plug the bulk of the remainder through the 320 million euros bond conversion, which would give them a controlling stake in Carige. According to the paper, Apollo wants an option to buy the banks’ stake in Carige for 1 euro.

Such a plan might be difficult to swallow for both Italy’s government and the country’s banks.

Maccarone said on Wednesday the banks were considering whether to plug Carige’s entire capital shortfall themselves, without Apollo’s intervention.

Back in 2016, the US fund had offered to buy a controlling stake in Carige in a 550-million euros cash call, but the bank’s top shareholder – the Malacalza family of steel entrepreneurs – rejected the bid saying it did not reflect Carige’s market value.

The Malacalzas have a 27.6 percent stake in Carige. Vittorio Malacalza was quoted as saying at the weekend that Apollo’s renewed interest for the bank was not based on an industrial project.

Copyright Reuters, 2019