A merger that is more than just the sum of the parts: an integration of missions rather than procedures. Andrea Battisti, CEO of ARECneprix, tells us about the birth of the new company, which took place in January, and does this by starting out with the market situation.

“The Italian market is on average mature”, he says, “with 50% of the assets being managed by the top five operators and 75% by the top ten”. In addition, revenues in the sector, which have seen constant double-digit growth for the past decade, are suffering a slowdown: growth was 9% in 2022, while a rise of only around 4% is expected for 2023. “Another symptom”, Battisti reasons. “If we add to this that banks have now got their NPL ratios under control, there doesn’t seem to be the need for a derisking that would lead to significant new flows. In a context like this, it is natural for the big operators to look towards combinations and partnerships”.

Standardisation of tracking at a European level is facilitating the process, including that of the possible cross-border expansion of the activities of the largest operators. Under one or two conditions, the CEO stresses: “You must remember that the distressed credit management market contains highly specific vertical elements as the result of national case law, in particular when collection takes on a judicial aspect”.

Battisti then points out that “on the other hand, other forms of combination and reasons for operators to combine are driven by the search for specialisation, such as in the case of neprix and AREC”.

Two pieces of a puzzle

For his part, if he had to describe the journey that led to the combination of Arec and neprix, general manager Marco Raccah would have no doubt: “We are simply two pieces of a jigsaw puzzle that slot in together. On the one hand we have neprix’s ability to work on loans and bulk data, starting from its profound knowledge of the digital sector; while on the other, Arec’s expertise lies in analysing and managing the assets in a sartorial manner. All of which under the umbrella of illimity, the bank founded by Corrado Passera that enables both of them to deploy their potential to the utmost”.

With a long international experience behind him of working in China, Britain and Israel, Raccah was a pioneer in real estate asset enhancement. “I believe that our role as a servicer gives us a kind of social responsibility towards the economic system”, he reflects. “If you manage loans with the aim of simply selling off the underlying assets to obtain the highest market value, you are liable to trigger a mechanism that harms all of the satellite activities revolving around those assets. We take a different approach. We try to obtain more value for everyone by resorting to the use of specialist expertise gained over the years in an international context, so that at the end of the process everyone finds themselves better off”.

Cross-contamination between models

“The merger with neprix”, continues Raccah, “enables the typically tailored approach that has always characterised Arec to be taken to an industrial level. We are talking about cross-contamination between models”, Battisti notes. “Arec’s average ticket was very high, around thirty million euro, which was combined with a consolidated and specific verticality on enhancing real estate value. Thanks to the merger, we can also set our sights on lower figures, from five hundred thousand to a million euro, in this way managing to contain costs and extract the full value that a highly customer-centred approach is able to provide”.

As in any merger process, it’s the people that count. “In ARECneprix lawyers and asset managers work at the same table”, Raccah states. “My greatest satisfaction? When I realised that the lawyers’ teams had begun to understand the Excel spreadsheets on which the engineers were working. A team like ours must be integrated at the highest levels, and you can only achieve this objective by having professionals of different backgrounds working together on a daily basis”.