(Bloomberg) -- Banca Progetto SpA is sounding out investors for an initial public offering in the second quarter as owner Oaktree Capital Management plans to sell a stake in the challenger bank. 

“Oaktree aims to sell between 35% to 40% of the company by listing it on the Star segment of the Milan stock exchange,” the bank’s Chief Executive Officer Paolo Fiorentino said in an interview at the company’s headquarters in Milan. “Our advisers have started informal meetings and there is interest from several Italian investors, including some pension funds.”

US investment fund Oaktree bought Banca Popolare Lecchese in 2015 and relaunched it as Banca Progetto the following year, focusing on loans to small and medium-sized companies backed by state guarantees. Banca Progetto’s profits rose 38% last year to €71.9 million  ($77.5 million) boosted by income from lending and a wider business mix, Fiorentino said.

“I think there are good opportunities to go ahead with the IPO in the second quarter,” he said.

The challenger bank hired STJ Advisors as financial adviser and is also working with Citigroup Inc., Intesa Sanpaolo SpA and UBS Group AG on the possible listing. The offering could value the lender at as much as €600 millions euros, according to media reports. 

The CEO didn’t comment on a possible valuation of the bank. 

Highlights From Interview

  • Profits will keep increasing in all business lines, CEO Fiorentino said
  • Expects bank to gain additional market share for state-backed loans
  • Loans to SMEs increased 4% to €2.8 billion in 2023, with similar growth expected in 2024
  • Revenues from factoring are expected to be more than €1 billion this year
  • Adjusted return-on-equity at approximately 30%, adjusted cost/income ratio at around 30% at end of 2023
  • “Bank has consolidated its growth path, exceeding €8.5 billion in total assets, of which more than €7 billion dedicated to small and medium-sized enterprises”
  • Banca Progetto, which has around 240 employees, plans to hire additional 100 employees in the next three years
  • Most of the funding comes from 117,000 active retail clients in Italy, the Netherlands, Germany and Spain

 

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