December 18, 2019 / 3:19 PM / a month ago

Sweden's Intrum sole bidder at present for Cerved's credit unit -sources

* Cerved hired Mediobanca to asses options for unit

* Intrum placed bid, Credito Fondiario sitting on the fence

* Italian bad loan market consolidating after peak phase

By Valentina Za

MILAN, Dec 18 (Reuters) - Europe’s biggest debt collector Intrum is at present the sole bidder for the loan managing unit put up for sale by Italian financial group Cerved , two sources familiar with the matter said on Wednesday.

Italy’s loan recovery industry has boomed in recent years fed by some 180 billion euros ($198 billion) in impaired loans shed by banks to tackle the legacy of a harsh recession.

With sales slowing, loan recovery firms are looking to join forces to buttress profits by growing in size and cutting costs.

Cerved started studying options for its debt collection unit after losing a 10-year contract with bank Monte dei Paschi and failing to secure the bad loan unit of Greece’s Eurobank in tandem with funds Elliott and Bain.

CEO Andrea Mignanelli said in October the group could combine the division with a debt purchasing business.

“We need to face the reality that things are changing in the Italian market,” he said at the time.

Two sources said the unit could be worth around 400 million euros, a lower price tag than calculated by some analysts whose estimates stretched to 490 million euros.

The unit has failed to draw interest from foreign investment funds because the Italian bad loan market has entered a mature phase where there are fewer bargains, a person who had contacts with potential buyers said.

Peers looking for scale were the only contenders.

Intrum has said it wants to expand further in Italy after striking a 3.6 billion euro deal last year to set up a loan recovery business with bank Intesa Sanpaolo.

It submitted a cash bid for Cerved’s unit through its Italian arm, one source said.

Bad loan specialist Credito Fondiario, which is owned by Elliott, had considered offering a share swap deal for the business, but has decided to sit on the fence for now, two sources said.

It could be back in the game depending on the outcome of talks between Cerved and Intrum, the sources said.

Credito Fondiario has hired advisers to assess strategic options and earlier this year held tie-up talks with rival Banca IFIS, failing to reach an accord. It is looking to bulk up as it eyes a potential market listing down the road.

Cerved’s board is expected to discuss Intrum’s bid at a board meeting on Thursday, one person said.

News of Intrum’s bid was first reported by Il Sole 24 Ore daily.

The sale would allow Cerved to focus on its credit information and market solutions businesses. Acquisitions boosted sales at the unit by 29% to 128 million euros in the first nine months.

$1 = 0.9073 euros Reporting by Valentina Za; Editing by Kirsten Donovan

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