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Competitive Position

European NPL Market

European loan portfolio market volumes in 2019 have decreased from the all-time peak in 2018, but remain healthy. Italy continues to represent over a third of the market in terms of number of transactions, and together with Spain made up over half of the deal volume during the year.  

The composition of these portfolios is evolving, with Unlikely-to-Pay loans becoming increasingly prevalent in Italy, making up over a third of the 2019 transactions and pipeline. In Spain, Real Estate Owned portfolios make up over half of the market, with investors having taken assets onto their own balance sheets in the wake of the Spanish real estate crisis and now looking to liquidate their investments. Elsewhere in Europe, our other markets continue to present interesting opportunities. The French secured NPL market has been a key development during the course of 2019, as the domestic banks finally take steps to reduce their non-performing and non-core stocks. We have seen three significant transactions during the course of the year and Hoist Finance views this market as a key growth opportunity. This is truly demonstrated by the acquisition of a portfolio of non-performing mortgages in France, which was our largest portfolio investment ever. 

Poland remains encouraging, with healthy numbers of small to medium-sized transactions. The demise of GetBack has served to push the market back towards more sustainable return levels. We also continue to see opportunities in the non-core performing loan portfolio space, an area of the market which we are well-placed to serve after we established our performing loans platform in Warsaw last year. 

The UK and Germany, as our most mature unsecured NPL markets, continue to demonstrate relatively stable and predictable pipelines. The more interesting developments in these countries are likely to come in the secured space – real estate and shipping loans respectively. 

Looking more deeply at the asset class mix, real-estate backed transactions continue to dominate the market. This includes portfolios with a mix of secured and unsecured assets, with banks seeking to drive down their NPL ratios quickly via bloc sales rather than granular disposals. 

Expanding into secured acquisitions within our existing markets is a key element of Hoist’s strategy since it will allow us to access much deeper pipelines whilst leveraging upon the people, infrastructure and relationships that we already have in these countries. Mixed portfolios are a particularly important part of this strategy, since they will often include unsecured assets for which Hoist Finance is highly competitive, but that historically we have not been able to acquire due to the barriers presented by the secured segments of the portfolios. By expanding our ability to acquire these new asset classes, we will also increase our ability to buy assets within Hoist Finance historic area of strength and expertise.

Our Competitive Position

Hoist Finance has historically been focused on the consumer unsecured NPL market, with minimal investments in other asset classes prior to 2018. We have been an asset specialist, concentrating on one asset class in which we have extensive knowledge and expertise. 

Our strategy since 2018 has been to expand into new asset classes, ensuring we are able to support banks and financial institutions in various stages of the credit risk cycle. This allows us to better compete with peers in our industry who operate integrated servicing platforms in multiple countries. 

However, we remain focused on our existing, prioritised markets, expanding the platforms we have already established rather than engaging in extensive, high-value M&A activity. To learn more about our expansion into new asset classes, click here. 

Hoist Finance also operates under a banking model, having been a licensed credit institution since 1994. This provides us with a unique funding advantage, with our acquisitions funded primarily through the use of customer deposits from our HoistSpar platform in Sweden and Germany. However, beyond this funding advantage, we are yet to fully exploit the potential of our banking platformWe have in the year taken new initiatives to ensure we are able to derive full value for our banking platform. 

 Debt Purchase Market Landscape 

Full-service
  • Large industry players with integrated servicing platforms in multiple countries
  • Have tended to grow expertise through M&A transactions
  • Competing at the larger end, but not seeking to compete directly with PE
Asset Specialists 
  • Smaller, more specialist companies targeting a specific asset class 
  • Typically tend to operate in one or a small number of jurisdictions 
  • Candidates for M&A, being absorbed by the “One Stop Shops” 
Banking Model 
  • Players who use banking model to fund their acquisitions 
  • Well placed to manage more complex assets (performing, corporate, UtP) 
  • May be a platform to develop into a true challenger bank 
Capital-light 
  • Focus on servicing relationships, with fewer assets on balance sheet 
  • May complement servicing revenues with some portfolio acquisitions 
  • Look for strategic partnerships: selling banks, investors, securitisation etc. 
Private Equity 
  • (Very large) investors who typically target a smaller number of high value deals 
  • May acquire servicing platforms, but treat these more as parallel investments  
  • Typically more visible in SME, corporate and secured NPL markets  

 

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- Annual Report 2019 -
- Årsredovisning 2019 -