(Corrects date to June 20, removes "senior" from Zilberman's
title in paragraph 3, corrects 11 financial deals to 16 in
By Anjuli Davies and Sarah White
LONDON/MADRID, June 20 (Reuters) - U.S. private equity firm
Warburg Pincus is trying to persuade European banks to sell it
more of their businesses by buying minority stakes that allow
them to share in any future upside, a senior executive told
Reuters on Thursday.
Banks are reluctant to sell assets at knock-down prices and
recent private equity attempts to buy assets in Europe as its
financial institutions shed non-strategic assets to bulk up
capital and meet stricter international rules, have struggled.
Warburg Pincus financial services managing director Daniel
Zilberman acknowledged it was an environment where "many people
would rather not be sellers" after prices have fallen sharply
since the euro zone crisis and global economic downturn, but he
said the firm had found a formula it hoped would work.
"Our pitch to them is that we'd love to buy 100 percent but
as a good partner we understand why they may not want to sell
100 percent right now," he said. "Rather than sell the whole
thing, bring me in as a partner, I will provide capital and we
will make a big success of it together, and you will see a share
in the upside."
Warburg Pincus, with more than $40 billion of assets under
management, has bought financial assets in Brazil, China and
India, using its "partnership model", taking majority stakes in
businesses in just four out of 16 financial acquisitions it has
made since 2009.
In May, it reached a deal with fellow U.S. private equity
firm General Atlantic LLC to buy a 50 percent stake in the asset
management arm of Spain's biggest bank Santander,
clinching the deal by taking a minority stake, Zilberman said.
Now, Zilberman is moving to London from New York to set up a
team of about five people to scour the region for more deals.
"We are seeing the same opportunities in Europe as we did in
the United States four years ago," he said.
Gaining regulatory backing in a region where governments
want to protect their investments in some banks bailed out in
the 2008 financial crisis, can also be tough. And buyers hunting
for bargains have often not been prepared to meet asking prices.
The International Monterary Fund (IMF) said in 2012 that
European banks need to sell loans or businesses worth $2.6
trillion to maintain capital ratios.
In terms of private equity-backed deals in the financial
sector in Europe, just $642 million worth of deals have been
done so far this year, down 55.8 percent on the same period last
year, Thomson Reuters data shows.
Private equity firms and hedge funds circling European
financial assets have so far had more luck picking up bundles of
soured loans than buying bank's businesses.
The partnership model also brings its own challenges,
Zilberman said, as governance and control issues can be more
complex than when buying a company outright, and the working
relationship makes or break a deal's success.
"You're getting married in a way," he said by telephone.
Warburg Pincus had previously worked with Spain's Santander,
taking, along with two other private equity investors, a 25
percent stake in the bank's U.S. consumer finance business.
That business could be listed on the stock market this year.
Zilberman declined to say if there was a similar plan for
Santander's asset management unit, but said that aside from
growing the business by pushing more products, more acquisitions
"We are also open to inorganic growth," he said.
Santander, which will book a 700 million euro net capital
gain from the deal, has said it wants to double its assets under
management in five years from about 152 billion euros now.
(Editing by Louise Ireland and Erica Billingham)