Market Vision
Credit information and credit collection markets in Italy
March 2014 PwC Strategy
1 Credit information 1
1.1 Market assessment 4
1.2 Market figures 12
1.3 Competitive landscape 21
1.4 International overview 30
2 Credit collection 36
2.1 Market assessment 39
2.2 Market figures 49
2.3 Competitive Landscape 57
Contents
PwC
Credit information Section 1
1
PwC
Executive summary – Market assessment
Section 1 – Credit information
2
Market assessment
The CI market recorded a negative trend 2009-2012 (CAGR 09-12 -1,6%), with a decline in the banking segment (-4,4% p.a., mainly due to price pressure) only partially offset by growth in Corporate (+2,6% p.a.) …
OK … that will show a positive outlook (CAGR 13-17 +3,7%)
• The Credit Information Market (€634M in Sales in 2012) presents 2 major Client Segments:
− CI Corporate embracing the supply of Business Information (e.g. financial and RE) to support companies' decision making process
− CI Banks embracing the supply of a wider range of information supporting Real Estate verifications, Credit Risk assessments and Credit Worthiness checks
• From 2009 to 2012, the CI Market recorded a negative trend (CAGR 09-12 -1,6%), mainly driven by price pressure in the banking segment:
− Overall flat CI Market in real/volume terms, presenting some resilience to negative economic cycle
• Corporate appears the most attractive segment, given under-penetration (~35% of Italian SMEs vs. 78% in the UK) and increasing the need of VA information to support companies' decision making processes
• GDP recovery and increasing granting of lending and mortgages from Financial Institutions expected in the next years (IMF) will likely improve Companies spending propensity and Banks' need of information
• The CI expected growth (CAGR 13-17 +3,7%) will be primarily driven by Corporate (+5,7%) and Real Estate Segments (+2,6%) while Credit Bureau will show a lower growth mainly due to a price pressure
OK Expected economic recovery will have a positive impact on CI market …
… nevertheless presenting some resilience to economic cycle (real GDP CAGR 07-12 -1,5%)
OK
~
PwC
Executive summary – Competitive landscape
Section 1 – Credit information
3
Competitive landscape
Very concentrated
supply structure with Cerved and Crif as dominant Players …
~
• The Credit Information Industry, for both Corporate and Financial Institutions, is characterised by the presence of 2 dominant Players, Cerved and Crif together covering ~70% of the market, presenting a wide/complete offer portfolio:
- Cerved (RMS 1,6x and ~50% EBITDA) is the Market Leader in Italy
- Crif (RMS 0,6 and ~30% EBITA) has successfully implemented a internationalisation strategy with over 30% of Sales generated outside of Italy
• The Credit Information Corporate Industry is a "volume based business" presenting high capital intensity (Capex/Sales) and high operating leverage (Fixed Costs/Opex), and requires relevant IT investments and technical integration with clients.
• Profitability in Credit Information appears mainly driven by experience/scale economies, presenting a "thin and steep" Normative Band
• Cerved and Crif present similar "apparent strategies" influencing the entire industry:
- Further industry consolidation through an aggressive M&A/growth-through-acquisition strategy, and
- Continuous product innovation (e.g. service features, bundle/ package, client fruition/experience) aiming to off-set product commoditisation, increase clients' switching costs and balance price pressure (mainly in the banking segment)
Profitability potentially effected by some price pressure and product commoditisation, … but overall balanced by offer innovation (e.g. VA services)
… given high entry barriers represented by fixed costs/capex (and sales force in Corporate Segment) and intense
M&A
OK
~
PwC
Market assessment Section 1.1
4
PwC
Credit Information is crucial both for Corporate and Financial Institutions to support the decision-making process…
Section 1.1 – Market assessment
5
Description
Main Products
Credit Information Banks Credit Information
Corporate
Business Information* Business
Information Real Estate Credit Bureau
Rating & Analytics
• Supply of Financial Information on counterparties to support company decision-making and optimise credit risk management policies
• Supply of Financial Information on counterparties to support company decision-making and optimise credit risk management policies
• VIPO**: verification of real estate assets owned by companies or individuals
• Mortgage Survey: real estate property appraisal
• Credit risk assessment and consulting services for the development of internal rating sy stems
• Supply of credit worthiness information on consumer lending clients
• Standardised and basic Financial Information, information on consumer payment history, financial analysis
• Dossier and reports with elaborated Financial Info
• VIPO**: Verification of existence of real estate assets, mortgages and monitoring of properties
• Mortgage Survey: Banks support in assessing value of mortgage collateral
• Provide a rating & analytics system and a model for credit risk assessment
• Facilitation of credit worthiness checks
Clients Segment
• Large Corporate, SMEs and professionals, Corporate, other institutions
• Large banks, regional banks, other Financial Institutions, other banks
Note: (*) Business Information Corporate also include other products like Real Estate VIPO (**) VIPO = Visure Ipocatastali /Ipotecarie-Catastali (Mortgage/Cadastral Certificates)
PwC
BI Providers play a key role in the Value Chain, aggregating and elaborating raw data, with limited disintermediation risk from backward Players (e.g. Infocamere, Telemaco, Agenzia del Territorio) up to date
Section 1.1 – Market assessment
6
End-users (Financial Institutions, Corporates, SMEs, Professionals and PA)
Associations and Others
Public Administration
Business Information Providers Telemaco (retail distribution platform)
AICA*** (wholesale distribution
platform)
Credit Bureau Unofficial
Sources Official
Sources Infocamere
(Chambers of Commerce**, Registro delle Imprese)
Agenzi a delle Entrate*
(Catasto, Conservatoria)
Regi stro delle Imprese
Primary Sources
• Pr ess Release • Su rvey
• Su ppliers/Clients • Web
• Pr ofessional r eg isters
• . . .
Court Archives • La n d r egister • Pr operty registers
• …
Others
Note (*): Agenzia delle Entrate incorporated Agenzia del Territorio in 2012; CCIA = Camera di Commercio, Industria, Artigianato e Agricoltura;
(***) AICA = Associazione Italiana per l 'informatica e il Calcolo Automatico
PwC
Credit Information providers realise, through data processing, different value-added, customised products for professionals, Corporate, SMEs or Financial Institutions
Section 1.1 – Market assessment
7
Data Sourcing
Data Processing Products Sales &
Distribution Customers
Official Data
Raw Data (reselling)
Combined Products
Value-added products
Customized Products
Data matching
Doubt resolution
Rating & Analy tics
Database creation
Interview integration
Data update
Unofficial Data
Account managers Corporates
Salesmen
Web
Dedicated networks
SMEs & Profess.
Financial Institutions
Other Institutions
Proprietary Data
In focamere, Telemaco
Cerved, Crif, Assicom
• Companies covering different phases of the value chain
Credit Information Value Chain
PwC
Major market trends in CI include growing adoption/penetration in Corporates and SMEs and increasing demand for Value-Added products…
Section 1.1 – Market assessment
8
• Corporate decision-makers progressively use detailed business Information to support key decisions (e.g. credit assessment of customers, competitive intelligence, rely on rating & analytics data)
Adoption of Intelligence
Tools
Impact Relevance
2
5
%
Risk Analysis Description
OK
• Risk of disintermediation from Data Sources, improving offer from Raw Data to VA Services:
- Infocamere (managing raw data of Chambers of Commerce) markets products to end-users through Telemaco
- Agenzia del Territorio started sale of VIPO products
! Disinter-
mediation Risks
• Increasing demand for Value Added and Quality Products including Scoring Models, investigative and unofficial/off-the-record information, data base cross-checking
Demand for VA/Quality
Products
OK
Trends
Increasing consolidation
~
2
5
%
• The Credit Information market has high entry barriers mainly represented by the fact that it is a "volume based business" that requires strong IT investments and technical integration with clients (especially for the BI business both for Corporate and Financial Information). The Real Estate business is less complex and shows a strong competition between small players
PwC
…whose quality, within the Rating & Analytics segment, could be also certified through the obtainment of certifications from European Supervisory Authorities (ESAs)
Section 1.1 – Market assessment
9
CRAs (Credit Rating Agencies) were introduced for the first time the 7 December 2009 by the EU Regulation 1060/09
Credit Rating Agency (CRA)
CRA are enabled to assigns credit ratings about the debtor's ability to pay back the debt and of the likelihood of default. An
agency may rate the credit worthiness of companies but not of individual consumers.
The award of CRA issued by ESMA* ensure that the operator meets high standards of organisational and corporate governance,
the integrity, objectivity and transparency of the rating process
ECAIs (External Credit Assessment Institutions) were first introduced by the "New Regulations for the Prudential Supervision
of Banks" (Circular no. 263 of 27 December 2006) in Europe
External Credit Assessment Institutions (ECAI)
ECAIs must be formally recognised by the relevant ESAs - European Supervisory Authorities (EBA*, ESMA*, EIOPA*) for the euro area Countries in which they will be used in line with
the CRD (Requirements Directive )
Ratings provided by ECAI could be use to determine Bank's capital requirements for credit risk in the standardised
approach.
Obtainment of CRA and ECAI certifications allow companies to offer certificated services with more value for clients
Note (*): ESMA = European Securities and Market Authority; EBA = European Banking Authority; EIOPA = European Insurance and Occupational Pension Authority
PwC
The penetration of Business Information within Italian SMEs (~35%) is far below those of more developed UK market (78%)
Section 1.1 – Market assessment
10
Business Information penetration on Corporates (2012, percentage, K units)
Source: Eurostat, Cerved Group
25/35%
60/70%
70/80%
30/40%
78%
0%
20%
40%
60%
80%
100%
Small Co.(10 - 49 FTE)
Medium Co.(50 - 200 FTE)
Large Co.(>200 FTE)
Companies>10 FTE
Companies >€ 1M
Italy UK
Number of Companies
~170 K ~20 K ~4 K ~194 K ~300 K
PwC
Info Quality and Completeness appears to be the critical Key Buying Factors for customers of Credit Information Corporate
Section 1.1 – Market assessment
11
Key Buying Factor of Clients (index 1-5)
“Quality and Online Credit Information services are the key features that oriented our purchasing decision.”
Sales Manager – Metal Processing Co
“We are very sensitive to Price, Readiness and Completeness of Information in a provider. We continuously receive and consider offers from other players”
Credit Manager – Food &Wine Co
“We would be so much interested in a Data Bank with Updated and Complete Information on our clients. We take advantage of Investigative Service Agencies both for Credit Information as well as Credit Information Services”
Admin & Finance Chief – Bottling Water Co
5,0 5,0
4,5
4,0
2,0
1,0
0
1
2
3
4
5
InfoQuality
infoComple-
teness
InfoReadi-
ness
Pricing BundleCredit Info/
Collection
Brand
Source: Interviews with Industry Experts and Corporate Clients
PwC
Market figures Section 1.2
12
PwC
While Credit Information services for Corporates comprises only Business Information, Banks require a wider variety of products like Credit Bureau and Real Estate VIPO and Mortgage Surveys
Section 1.2 – Market f igures
13
Credit Information Market (2012, €M, percentage)
Source: Annual reports, Aida, Web, PwC Estimate
275 359 CI Market:
€634M
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
CI Corporate CI Banks
Business Information Corporate,
Business Information Banks
Real Estate Banks
Rating & Analytics Banks
Credit Bureau Banks
Credit Information Market by products (2012, €M, percentage)
394
98
102
634
0
50
100
150
200
250
300
350
400
450
500
550
600
650
2012
Business Information
Real Estate
Rating & Analytics, 40
Credit Bureau
PwC
From 2012 to 2009, Credit Information Market recorded a slightly declining trend with positive growth of Credit Information segment (+2,6%) and negative growth of the Banking segment (-4,4%)
Section 1.2 – Market f igures
14
Evolution of Credit Information Market (€M, percentage)
Source: Annual reports, Aida, Web, PwC Estimate
CAGR 09-12
-1,6%
-7,4%
-1,0%
+2,6%
-1,0%
-6,1%
255 265 270 275
123 126 123 119
123 134 118 98
41 44
41 40
123 115
110 102
665 684
662 634
0
100
200
300
400
500
600
700
800
2009 2010 2011 2012
BI Corporate BI Banks RE Banks R&S Banks CB Banks
CI Banks
-4,4%
PwC
CI market outlook, both for Corporate and Financial Institutions, will be primarily affected by four key drivers regarding penetration, volume per client, price and mix effect
Section 1.2 – Market f igures
15
Nu mber of Com panies/
Fin ancial In stitutions
Penetration
Number of Clients
1
Volume per Client
3
Mix Effect
2
Price Effect
4
Average Revenue
per Account (ARPA)
Credit Information
Market
Ma r ket drivers
x
x
• Spen ding per client
Banks Corporate
Banks Corporates
Banks Corporates
Banks Corporates
Ou tlook 13-17
Bu siness Fundamentals
Banks
• Lending stock/new
• Mortgages stock/new
• # Real Estate transactions
Corporate
• Days of payment
• M&A volume
• Lending new
• GDP
• N u mber of active companies
PwC
Overall, Credit Information market for Corporate shows higher potential compared to CI Banks, especially in terms of penetration and possibility of price increase
Section 1.2 – Market f igures
16
Volume per Client
Mix Effect
Price Effect
Penetration
Banks Corporates
• Cu rrent client base of Bu siness Information pr oducts is still l imited especially among SMEs
(2 012 penetration ~35%)
• Ex pected GDP recovery in n ext years (according to IMF est imates) will likely improv e companies
spending propensity
• Econ om ic recovery w ill a lso improve # of M&A a ct ivities and new lending increasing companies'
need of information
• Im prov ed products' offer and increasing a wa reness a bout the relevance of value added
pr oducts perceived as a KBF
• Poten tial n egative impact from low spending of a dditional new clients
• Lim ited price increase is expected due to the dev elopment/introduction of v alue added
pr oducts
• Pen etration level among Financial In stitutions rea ched a lmost 100% leaving almost n o room
for improv ement
• Fu r thermore, con solidation trend among m ajor Financial In stitutions may lower clients'
pen etration
• Econ omic recov ery followed by an increase in new lending, # of r eal estate transactions and
new m ortgages will likely increase Bank's n eed of Cr edit In formation
• Increasing attention of Ba nks to the entire credit process with the subsequent need of m ore
v a lue a dded information especially for Credit Bu r eau and Rating & A nalytics products
• Hig h pressure on price is expected considering th e low level of Ba nks resources
• Ex pected economic recovery should partially
m itigate this n egative effect
1
3
2
4
Ou tlook 13-17
PwC
Consolidation trend among Financial Institutions and reduction of active companies within the Italian market partially lowered the number of potential customers of CI services…
Section 1.2 – Market f igures
17
5.316 5.284 5.282 5.276 5.240 5.186
0
1.000
2.000
3.000
4.000
5.000
6.000
2008 2009 2010 2011 2012 2013
Number of Active Companies in Italy (percentage, K units)
799 788
760 740
706 690
34,1 34,0
33,7 33,6
32,9
31,9
30
31
32
33
34
35
600
640
680
720
760
800
2008 2009 2010 2011 2012 2013
Ba
nk
Bra
nc
he
s in
Ita
ly (
K u
nit
s)
Nu
mb
er
of
Ba
nk
s in
Ita
ly (
un
its
)
Number of Banks and Bank Branches in Italy (percentage, units, K units )
Source: Infocamere, Banca d'Italia
CAGR
08-13
-0,5%
CAGR
08-13
-1,3%
-2,9%
PwC
…while GDP and M&A activity positive outlooks will have a favourable impact on Credit Information Corporate market…
Section 1.2 – Market f igures
18
0,4%
-2,4%
-1,8%
0,7%
1,1%
1,4% 1,4%
-2,5%
-2,0%
-1,5%
-1,0%
-0,5%
0,0%
0,5%
1,0%
1,5%
2011 2012 2013 2014E 2015E 2016E 2017E
1.390 1.365 1.375 1.390 1.409 1.429 GDP
(€B)
GDP Growth – Constant prices (percentage)
M&A Transactions (units, percentage) CAGR
11-13
-2,1%
CAGR
14-17
+1,3%
+3,3% +3,5% +1,3% +2,6% +3,1% +1,8% YoY
growth
CAGR
11-13
+3,4%
CAGR
14-17
+2,5%
Source: IMF, AIFI (Associazione Italiana Private Equity e Venture Capital), PwC estimate
329
340
352
357
366
377
384
300
310
320
330
340
350
360
370
380
390
2011 2012 2013 2014E 2015E 2016E 2017E
1.424
PwC
…as the increase in stock lending and residential mortgages will drive Credit Information Banks growth
Section 1.2 – Market f igures
19
1.510
1.470
1.408 1.414
1.444
1.486
1.530
1.000
1.100
1.200
1.300
1.400
1.500
1.600
2011 2012 2013 2014E 2015E 2016E 2017E
-2,6% -4,3% +0,5% +2,1% +2,9% +2,9% YoY
growth
Lending Stock – Retail & Corporate (€B, percentage)
Residential Mortgages (€B, percentage)
CAGR
11-13
-3,4%
CAGR
14-17
+2,7%
-0,5% -0,5% +4,0% +6,5% +6,2% +5,8% YoY
growth
368 366 364
379
403
428
453
150
200
250
300
350
400
450
500
2011 2012 2013 2014E 2015E 2016E 2017E
CAGR
11-13
-0,5%
CAGR
14-17
+6,2%
Source: IMF, AIFI (Associazione Italiana Private Equity e Venture Capital), PwC estimate
PwC
Credit Information Market growth will be primarily driven by Business Information Corporate segment (CAGR 13-17 +5,7%)
Section 1.2 – Market f igures
20
CAGR 13-17E
+3,7%
+2,6%
+1,6%
+5,7%
+2,4%
+1,3%
287 303 320 339 359
114 113
115 118
121 91
92 94
97 101
36 37
37 39
40 95
95 97
98 100 623
640 664
692 721
0
100
200
300
400
500
600
700
800
2013 2014E 2015E 2016E 2017E
CI Corporate BI Banks RE Banks R&S Banks CB Banks
CI Banks
Source: IMF, AIFI (Associazione Italiana Private Equity e Venture Capital), AIDA, Financial Reports, PwC estimate
CI Banks +1,9%
Evolution of Credit Information Market (€M, percentage)
PwC
Competitive landscape Section 1.3
21
PwC
Cerved and Crif are the Market leaders in Italy with sales in €300M range…
Section 1.3 – Competitive landscape
22
Sales of Major Players* (2012, €M)
Sources: Corporate Website, Annual Report, AIDA
Note (*): Total Sales embracing both CI, CC and other Businesses
291
197
151
98
54
30 29 23 20 20 10 4
1
88
0
50
100
150
200
250
300
Cerved Crif Prelios Infocamere Prometeia Assicom Ribes REAG Praxi Experian Visura Eagle & Wise Tecnit@lia
Focus on Asset
Management
CI ~25%
of Sales
Focus on both CI
and CC
Experian and
Cerv ed created a
JV to operate
within Credit
Bureau market
(sales €13M)
Focus on
Macroeconomic
Research and
Analysis
Market Leaders
Sales generated
abroad Italy
285
Globa l Bu siness Information Players
• D&B: sold Ita lian operations to Crif in 2009 (a greement to use D&B br and and
commercialize D&B pr oducts) • Equ ifax: sold Italian operations to Experian in
1 994 • Experian: present in Italy since 1992, limited
m arket share. Acquisition of Equ ifax Italia in 1 994. JV with Cerved in Credit Bureau in 2012
PwC
… and presenting a wide/complete portfolio while other players appears to be more focused
Section 1.3 – Competitive landscape
23
Cerved
Credit Information Market
Credit Information Ba nks Credit Information
Corporate
Bu siness Information* Bu siness
Information Real Estate
Credit Collection Market
Credit Bu reau
Rating & A nalytics
Banking N PL
Consu mer Finance
Financial Institution Serv icing Corporate
Serv icing
Other
Crif
Prelios
Infocamere
Prometeia
Assicom
Ribes
RAEG
Praxi
Experian
Eagle & Wise
Tecnit@lia
Databank: Marketing
inf ormation
Lince Cerved Cerved Centrale Bilanci
Cerv ed-Experian JV
Cerv ed Credit Management
Finserv ice Cerv ed Credit Management
Cribis D&B
Crif Serv ices
Crif Teleserv ice
Crif Teleserv ice
Marketing Serv ices
Asset Management
Market Statistics
Macroeconomic research
Adv isory
Real Estate Management
Adv isory
Cerv ed-Experian JV
Adv isory, marketing
Intelligence
Prelios Credit Serv icing
Crif Dec. Solutions Crif Spa Crif Spa
Visura Certif ied email
Real Estate Specia lists
Note: (*) Business Information Corporate also include other products like Real Estate VIPO
PwC
Profitability in Credit Information appears mainly driven by experience/scale economies (captured by RMS), presenting a "thin and steep" Normative Band
Section 1.3 – Competitive landscape
24
Scale and Profitability of Major Players (2012, €M, percentage)
€30M
Sales
Source: AIDA, Financial Reports, Corporate Website, PwC estimate
Cerved
Crif
Infocamere
Ribes
Assicom
Visura
REAG 4
Prometeia
Eagle & Wise
0%
10%
20%
30%
40%
50%
60%
0,02 0,03 0,06 0,13 0,25 0,50 1,00 2,00
EB
ITD
A
%
Relative Market Share (RMS)
PwC
Over 2009-2012 period, Cerved and Assicom appear as outperformers in terms of Sales growth and Profitability improvement
Section 1.3 – Competitive landscape
25
Sales and EBITDA growth of major Players* (2012, percentage)
Sources: AIDA, Financial Reports
Notes (*): Prelios and Tecnit@lia were non included in the analysis because they recorded a negative EBITDA during FY12
€100m
Sales 2012
Cerved
Crif
Infocamere
Assicom
Ribes
REAG 4
Eagle & Wise
Praxi
Prometeia
Experian Holding
Visura
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
-20% -10% 0% 10% 20% 30% 40%
CA
GR
09
-12
EB
ITD
A
CAGR 09-12 Sales
Increasing
EBITDA%
Decreasing
EBITDA%
PwC
Industry consolidation in Italy mainly driven by Crif (D&B, Cypress Software System, Recom and Teledata) and Cerved (growth-through-acquisitions), with relevant internationalization process of Crif
Section 1.3 – Competitive landscape
26 Source: Public Information, MergerMarket
• 2005: acquisition of CCB - Czech Credit Bureau and SCB - Slovak Credit Bureau
• 2006 - 2009: M&A Activity in Slovakia, Poland, US
• 2009: acquisition of D&B Italy, creation of Cribis D&B distributing D&B branded products and solutions (Business Information, credit management, direct marketing, credit collection, supply management)
• 2010: acquisition of APRO Systems from Equifax. APRO systems is leader of loan origination and account opening in the US
• 2011: acquisition of Cypress Software Systems; the company offers a wide variety of software and services for supporting the automation of Financial Institutions
• 2012: CRIF established a JV with Neal & Massy for offering credit bureau services in Jamaica and Caribbean
• 2014: acquisition of Recom, leader company of Credit Collection in Turkey.
• 2014 : Acquisition of Teledata, Switzerland based credit and Business Information service provider, from Axon Active AG
• 2004: control acquisition of Consit (mortgage and lend register information)
• 2005: acquisition of Databank (firm competitive position and business sector analysis)
• 2005: integration of Pitagora (IT services to control complex structured processes)
• 2008: merge with Lince and Finservice
• 2011: acquisition of Jupiter (non-performing loans) and MF Honyvem (database and Business Information)
• 2012: Joint venture with Experian in Credit Bureau Services (SIC – Sistema di Informazioni Creditizie)
• 2013: Cerved Agrees to acquire Experian Data Services.
• 2013: Acquisition of Tarida (Credit Collection consumer finance) from Gruppo Delta Spa
Cerved
CRIF
PwC
Quite concentrated Supply Structure, with Crif and Cerved covering ~70% of Credit Information Market
Section 1.3 – Competitive landscape
27
Market Share of Credit Information (2012, percentage, €M)
Source: AIDA, Financial Reports, Corporate Website, PwC estimate
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2012
Cerved
42%
Crif
26%
Infocamere 4%
Ribes 4%
Assicom 3%
Others
21%
€634M
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Cerved (Lince, Cerved), 54%
Crif (Cribis D&B, Crif Spa), 15%
Infocamere, 7%
Assicom, 4%
Visura, 3%
Ribes, 1%
Others, 16%
Business Information Real Estate Rating &
Analytics
Credit
Bureau
Cerved
(Cerved) 26%
Ribes 21%
Crif
(Crif Services) 16%
REAG 8%
Tecnit@lia 1%
Others 19%
Prelios 4%
Eagle & Wise 4%
Cerv ed (Centrale
Bilanci) 39%
Crif (Crif Decision
Solutions) 36%
Prometeia 19%
Others 5%
Crif (Crif Spa) 76%
Cerved
(JV Experian) 12%
Others 12%
98 40 102 395
PwC
While BI Market value remained almost steady, Real Estate Market dropped (-17,2% from 2011 to 2012) mainly due to Crif negative performance (-3,4pp) with Cerved and Ribes gaining share
Section 1.3 – Competitive landscape
28 Source: AIDA, Financial Reports, Corporate Website, PwC estimate
Cerv ed Group (Lince, Cerved)
55%
Cerv ed Group (Lince, Cerved)
54%
Crif (CRIBIS D&B, Crif Spa)
15%
Crif (CRIBIS D&B, Crif Spa)
15%
Inf ocamere 7%
Inf ocamere 7%
Assicom; 4% Assicom; 4%
Visura Spa; 3% Visura Spa; 3% Ribes; 1% Ribes; 1%
Others 17%
Others 16%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011 2012
Real Estate – Market Shares Evolution (percentage, €M)
Cerv ed Group (Cerv ed)
24%
Cerv ed Group (Cerv ed)
26%
Crif (Crif Serv ices)
19%
Crif (Crif Serv ices)
16%
Ribes 19%
Ribes 21%
REAG 4 ; 7% REAG 4 ; 8%
Prelios, 6% Prelios, 4%
Others 19%
Others 19%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011 2012
118 98
Var. 11-12
+0,0%
-1,5pp
+0,6pp
+2,5pp
-3,4pp
+1,7pp
+0,7pp
-0,6pp
Business Information – Market Shares Evolution (percentage, €M)
393 395
Var. 11-12
-0,3%
+0,5pp
-0,5pp
+0,4pp
-0,4pp
-0,1pp +0,3pp
PwC
Credit Bureau and Rating & Analytics segments are led by Crif (Group "core business"), leveraging on a wide offer portfolio (including IT-based and consulting services) and the Consumer focus
Section 1.3 – Competitive landscape
29
Credit Bureau – Market Shares Evolution (percentage, €M)
Crif (Crif Spa) 76%
Crif (Crif Spa) 76%
Cerv ed Group (JV Experian)
12%
Cerv ed Group (JV Experian)
12%
Others 12%
Others 12%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011 2012
110 102
Var. 11-12
+0,0pp
+0,0pp
-0,0pp
Rating & Analytics – Market Shares Evolution (percentage, €M)
Cerv ed Group (Centrale Bilanci)
42%
Cerv ed Group (Centrale Bilanci)
39%
Crif (Crif Decision
Solutions) 34%
Crif (Crif Decision
Solutions) 36%
Prometeia 19% Prometeia 19%
Others 5% Others 5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011 2012
41 40
Var. 11-12
+0,0pp
+0,5pp
+2,5pp
-3,0pp
Source: AIDA, Financial Reports, Corporate Website, PwC estimate
• Initial focus on ECAI
(insourced by Banks)
• Recent launch on new
products (e.g.
Corporate Rating,
Advisory)
PwC
International overview Section 1.4
30
PwC
Information Industry reached 720 billion dollars in global worldwide revenues in 2012. The industry grew in aggregate by 3,4% in 2012 and is forecasted to continue growing at c. 4% (CAGR13-15)
Section 1.4 – International overview
31
Global Information Industry YoY Growth Rate (percentage)
2,2%
-6,4%
2,5%
3,6% 3,4%
4,1%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
2008 2009 2010 2011 2012 2013-2015
CAGR
B2B Trade
Publishing 4%
Education &
Human Capital Management
7% Credit &
Financial Information
7%
Education &
Training 9%
HR Information
1%
Legal, tax &
Regulatory 3%
Market & IT
Research 6%
News Providers
& Publishers 11%
Scientific,
Technical & Medical
Information 4%
Search,
Aggregation & Syndication
10%
Yellow pages &
Directories 3%
Consumer
Books 11%
Marketing
Services & Analytics
18%
Others
6%
Global Information Industry (2012, percentage, US$ B)
720 B US$
Global Credit & Financial Information Industry grew by 1,8% (CAGR10-12) and is expected to
grow at 2,2% rate in the next years (CAGR13-15)
Source: Outsell’s Information Industry Database, 2013
PwC
Global Financial and Credit Information market is characterized by an increasing competition, to a different degree for each business lines
Section 1.4 – International overview
32
Competition
• In the pure information segment, local firms face additional competition from consultancies, local analytical firms, and university spinoffs that offer similar services. Internet services as Google and Yahoo offer also business information. Due to the high competition in business information services, the prices have significantly dropped .
• For scoring services, the global competitors are international companies operating through local acquisitions, although their market share is relatively small. Private credit bureaus that offer scoring as an additional service are also considered competitors., as well as new “low-cost” companies with pure online business. These companies have built their business from scratch using advanced IT technology (e.g. CreditSafe). They used to serve a niche market segment that has not been closed to traditional scoring companies, which are offering online services to very small businesses for a comfortable price. Now, they have expanded their business and serve a wider group of clients in different countries. Information that these companies gather is synthetically merged and automatically processed; scoring is derived from pure mathematical/statistical models.
• Play ers that have a CRA licence and offer credit ratings in addition to scorings, face only a limited competition from the big three international rating agencies, as they operate in different market segments (the big three CRAs serve large multinationals, while the others serve mid-caps and large mid-size companies) under different modalities.
Key global Financial and Credit Information Market Trends Relevance Impact
2
5
%!
OK
~
• Creating and delivering software and tools which are tightly integrated with content, and deeply embed the information provider into its customers’ workflow, is the key for publishers in a range of information segments
Increasing
Integration OK
PwC
Price pressure, together with the networked nature of Internet has increased the value of partnerships especially for players that wants to cover wider markets
Section 1.4 – International overview
33
• Heavy price discounting is now a regular feature of the market (mainly within the banking sector)
• Many customers review their suppliers every 1 or 2 years and often change suppliers to obtain a lower price
• Information supplied is perceived as basically the same information from all the providers so price and other services such as good client relationships become more important
Price
2
5
%!
OK
~
Key global Financial and Credit Information Market Trends Relevance Impact
• Play ers try to cover wider markets in two ways: (i) by building networks and (ii) by establishing strategic partnerships:
− Networks: several BI & Scoring providers are organised in networks in order to exchange information in an integrated fashion, using explicit identification for each company.
− Scores – which usually differ between BI & Scoring providers in different countries are mapped, so that collaboration in a network allows a member to receive information for a specific enterprise from all member countries in a seamless and comparable fashion. There are currently two big networks in Europe, BigNet and D&B167
− Strategic arrangements and partnerships: for players that have not joined a network, strategic partnerships with similar entities operating in foreign markets are essential and remain the way forward to expand their business in the future.
Networks & Partnerships
2
5
%!
OK
OK
PwC
In few countries, such US and UK, the market is mature and exposed to pricing pressure resulting from new entrants competing with low-price strategies
Section 1.4 – International overview
34
Diversification into
Niches and New
Services
• Credit Information suppliers suffer the explosive growth in online data. New online data mining firms are growing exponentially. These new entrants are offering low-cost access to company financials
• Traditional players are loosing sales since other Business Information companies are offering broader choice of company information: for many end-users (particularly researchers in City institutions) general services such as Alacra, Factiva, LexisNexis are used as the main source of company financial and related information
• Considering distribution channels, larger players (i.e. D&B and Experian) have a direct sales force focused on targeting all large companies and more and more medium sized companies while the online channel is more to be used by smaller businesses spending less
• Larger players have responded to new low-cost entrants by launching their own services for SMEs, (i.e. findoutinfo.com from Equifax, Busibody from Experian, OneSourceExpress UK)
Key global Financial and Credit Information Market Trends Relevance Impact
OK
~
2
5
%
!
• Credit Information providers tend to move into new geographic markets through either alliances or acquisitions
• The BI & Scoring industry has seen in the last ten years several mergers between the major competitors. There is a strong ongoing concentration in many Member States, with two or three large companies possessing over 90% of the market share.
Geographical Expansion
~
OK
2
5
%
2
5
%~
PwC
Limited presence of the Top Global Players in the Italian market
Section 1.4 – International overview
35
Sales of Global Players (2012, percentage, US$ M)
Source: Annual Report, company Sec fi lings
Note (1): Year ended 31 March 2013, (2): Year ended 31 December 2012 (3): 30 September 2012, (*) US only
• Experi an has strong positions in each of its main markets. In the US credit information market, there is a benign ol igopoly of Experian, Transunion and Equifax
• In the UK, Experian leads the market, with a significant gap to Equ ifax and CallCredit
4,713
2,160
1,663
1,140 1,099 48%
83%
74% 85%* 87%*
61%*
52%
17%
26%
15% 13%
39%
0
1.000
2.000
3.000
4.000
5.000
Experian Equifax D&B TransUnion Acxiom FICO
Other Regions
North America
2 1
676
1 2 2 3
• Equi fax offers data, scoring, marketing and consu mer direct services. Revenues still come from Consumer Credit in the core US market, and the growth story is about increasing new services (marketing, scoring, etc.) and new geographies.
• D&B offers databases and analytics services, m arketing solutions, but focu ses on the US com m ercial information segment. It also offers bu siness information pu bl ishing.
• D&B has recently sold m any of its international operations to franchisees bu t will continue to own and operate businesses in selected markets including the US and UK
• TransUnion maintains one of the largest databases of consu mer credit information for the United States, Pu erto Rico, the US V irgin Islands and Canada
• Acxi om is a provider of marketing services to bu sinesses based on a database of consumer information
• It also provides analytical tools for processing this data, ru nning digital m arketing campaigns as wel l as traditional direct mail services
• FICO i s the leading global provider of scoring solutions in the N orth American market.
• It is focu sed on the US (70% of revenues) and financial services (65% of revenues)
Globa l Bu siness Information Players in Italy
• D&B: sold Ita lian operations to Crif in 2009 (a greement to use D&B br and and commercialize
D&B pr oducts) • Equ ifax: sold Italian operations to Ex perian in
1 994 • Experian: present in Italy since 1992, limited
m arket share. Acquisition of Equ ifax Italia in 1994. JV w ith Cerved in Credit Bureau in 2012
PwC
Credit collection Section 2
36
PwC
Executive summary – Market assessment
Section 2 – Credit collection
Market Assessment
• Credit Collection market refers to the management and collection of non performing receivables of Corporate and Financial Institutions, both consumer finance and banking NPLs, through judicial and extra - judicial procedures
• Main market drivers are:
− Increasing demand from Corporates and Banks to outsource credit collection activities
− Growing trend of the number of transfer agreements of NPLs from Banks to CC Agencies
• Credit Collection market experienced a positive growth in the last years (CAGR 09-12 +8,8%) in all market Segments: Corporate, Consumer Finance and Banking NPLs
• CC market is expected to record a relevant growth in the future (CAGR 13E-17E + 12,6%) driven by:
− Acquisition of new clients resulting in higher penetration in the Corporate segment
− Increase of volume per client mainly due to the growth of the amount of receivables handled by Third Party Agencies
− Price Increase given a higher bargaining power of TP Collectors due to NPL stock increase and saturation of Bank internal staff
OK Growing use of external agencies for credit collection procedures
OK CC market recorded a positive trend over the period 2009-2012 …
OK … also for the future trend growth is expected over performing historical rate thanks to the increase of volume per client
37
PwC
Executive Summary – Competitive Landscape
Section 2 – Credit collection
38
Few Specialised Collecting Agencies competing with big Banking Groups … … benefitting from progressive NPL outsourcing to Third Parties of Financial Institutions
~
Competitive Landscape
NPL Specialist
• Banking NPLs segment is characterised by the presence of few "not captive" NPLs Servicers competing with the "captive" Credit Management Units of Banking Groups created to hold non performing assets ("Bad Banks") and the internal Credit Division of Banking Groups
• Italfondiario is the market leader, with 35% of market and 34,2 €B of Asset Under Management in 2012 followed by Guber (21%), Cerved Credit Management (11%) and Prelios (10%)
Debt Collection Agencies
• Credit Collection market for Corporates and Consumer Finance is highly fragmented with a "long tail" of small companies with potential for consolidation and without a clear market leader
• In Corporate Servicing, Maran and Guber represents the main Players with 12% of market share each.
− Other relevant Players are: Euro Service, Assicom, Cerved (Finservice) and Recus Italia.
• In Consumer Finance Servicing, the major Players are Creditech (7% of MS), Maran (7%) and Cribis Teleservice (4%).
− Cerved entered the CC for Consumer Finance market in 2013 with the acquisition of Tarida (4% of MS in 2012)
Several medium/small Player competing in the Corporate and Consumer Finance segments … … resulting in highly fragmented industries with consolidation opportunities
~
PwC
Market assessment Section 2.1
39
PwC
Credit Collection Market refers to services of management and collection of non performing credits for Corporate, Banks and Consumer Finance operators
Section 2.1 – Market assessment
40
Corporate Servicing
Financial Institution Servicing
Consumer Finance Banking NPLs
Corporate Utilities & Telco
Small Tickets* "Bad Banks" Captive
Managed Internally
NPL Servicers
Corporate receivables collection and management services
Credit management in retail channel and collection for utilities
Description
• High value + low volume of receivables
• Flat fee + commission
• Labour intensive
• High volume + small value of receivables
• Commission based
• Labour Intensive
Business Model
Main operators
• Finservice • Assicom • Intrum Justitia • Cribis Teleservice
• Cerved Credit Management
• Geri HDP • Maran • Fire • AT Credit
Management
Credit management and collection for consumer finance institutions
Credit management units of Banking groups created to hold non-performing assets
• High volume + small value of receivables
• Labour Intensive
• Maran • Cribis Teleservice • Creditech • AT Credit
Management
• Unicredit Credit Management Bank
• BCC Gestione Crediti
• Intesa Sanpaolo • UBI • BPER • Veneto Banca • Cariparma • Carige • Banco Popolare • …
• Italfondiario • Guber
• Cerved Credit
Management
• Prelios Credit Serv icing
• FBS
• CAF
Internal credit collection division of Banking groups
• NPL management and collection
• NPL acquisition and securitisation
• Low volume + high value of receivables
Note (*) Amount below €10K
PwC
Credit Collection could be performed through a Judicial or Extra- Judicial procedure on the basis of the typology of credit to recover
Section 2.1 – Market assessment
41
Order Execution
Issue of Invoice
Expired Invoice/ Bad Debt
CC Corporate*
Performing Credit
Past Due
Stand- still
NPL
• Starting of a legal action if th ere is a t itle which enables
th e creditor to initiate ex ecution of proceedings
• Leg a l assistance
• Con stant monitoring of the ca ses
Note (*) Judicial Recovery process is progressively increasing also in the Corporate and Consumer Finance sectors especially trough identified actions with low
cost for the collectors
CC Banks
Credit Value Chain Collection Process
Extra Judicial Recovery
Judicial Recovery
• Telephone or field collection of ou tstanding credits
• Dem and letter
• Per sonalised procedures for different category of credits
• In cr easing deterrence a ct ivities
• Ev a luation of the convenience
to sta rt a legal action
Relevance High
Low
PwC
Major market trend in CC include outsourcing/transfer of receivables, shifting to Judicial services and Collector professionalisation
Section 2.1 – Market assessment
42
Impact Relevance
Risk Analysis Trend Description
Note: (*) NCP = Negoziatore Crediti Problematici, OTC = Operatore Tutela del Credito issued by UNIREC/EBITEC (**)TULPS = Testo Unico delle Leggi di Pubblica Sicurezza (***) TUB = Testo Unico Bancario
• Increasing demand from Corporates and Banks to outsource Credit Collection activities
• Credit Collection suppliers covering entire supply chain (extra- judicial, per-judicial and judicial)
OK Outsourcing
of Credit Collection
• Tighter professional rules (e.g. ethics, reputation) to obtain/maintain Collector License/Certification (e.g. NCP/OTC*):
- respect of Privacy Law
- training and “professional credits”
- Obtain a Licence to operate as a credit collection agency (Art. 115 TULS** ) and/or the Licence of financial intermediaries to operate in the transfer of receivable (Art 106/107 TUB***)
• Marginalisation (and potential exit from the market) of non-compliant Collects
OK
Licence/ Certification of Collectors
• Offer evolution with sophistication of collection techniques/processes according to debtor category (e.g. Corporate vs. Banks, Industrial Sector, Geographical Presence)
• NPL Specialists are 100% focused in the recovery of secured and unsecured non performing loan
Specialization of CC Offer
2
5
%
2
5
%
• Increasing demand for Judicial Services (vs. Extra-Judicial) from Corporate/SME purchasers aiming to recover the outstanding debt despite the risk to lose the debtor as client
Demand for Judicial Services
OK
~
Transfer of Receivables
• Increasing trend of the number of transfer agreements of NPL from Banks/Financial Institutions to credit collection agencies
OK
C / B
B
C / B
C / B
C
B = Ba n ks C = Cor porate
PwC
Although in September 2013 the gross NPL stock reached the highest recorded level of €145 B with a net NPL ratio of 4.5% …
Section 2.1 – Market assessment
43 Source: PwC analysis on ABI and Bank of Italy Data –as per ABI Monthly Outlook, Feb 2014
42 59
78
107 125
145
31
49
53
58
76
91
1,4%
2,3%
2,8%
3,5%
3,8%
4,5%
0,0%
0,5%
1,0%
1,5%
2,0%
2,5%
3,0%
3,5%
4,0%
4,5%
5,0%
0
50
100
150
200
250
300
2008 2009 2010 2011 2012 Q3 2013
Gross NPL stock Watch list Restructured Past due Net NPLs / Loans to customers (%)
Evolution of Doubtful Loans and net NPL Ratio in Italy (€B, percentage)
PwC
… the asset quality assessment of 15 Italian Banks still showed a low NPL coverage ratio (51,8%)
Section 2.1 – Market assessment
44 Source: PwC analysis on September 30, 2013 B/S, with the exception of Cariparma and BNL which data refer to June 30, 2013
Bubble size:
Gross NPL value
UCG
ISP
BMPS
UBI
BP
Iccrea BPER Mediobanca
Veneto Banca
BPM
BP Vicenza
Carige
CreVal BP Sondrio
CREDEM
30%
35%
40%
45%
50%
55%
60%
65%
70%
0% 1% 2% 3% 4% 5% 6% 7% 8%
Net NPLs / Loans to Customers
NP
L C
ove
rage R
atio
T op 15 Banking Group's NPL analysis (2013, percentage)
Avg
NPL Ratio
Avg
Coverage
Ratio
PwC
Increase of Debt handled by TP Collectors in the last 5 years (CAGR 08-12 +10,7% in volume, +10,0% in value), with reduction of Recovery Rate and increase of Unit File Value (€1,1/1,2K per file)
Section 2.1 – Market assessment
45
Debt Handled by Third Party Collectors (Flow) (€B, percentage)
Source: UNIREC (Unione Nazionale Imprese a Tutela del Credito)
19,5
29,2
30,9
37,8
42,9
47,2
0
5
10
15
20
25
30
35
40
45
50
2008 2009 2010 2011 2012 2013E
Files Handled by Third Party Collectors (Flow) (M Files, percentage)
23,2
27,6
31,4 32,8
34,7 37,2
0
10
20
30
40
2008 2009 2010 2011 2012 2013E
Unit Value of File Handled by Third Party Collectors (Flow) (€ per File)
844
1.061 983
1.152 1.237 1.256
0
200
400
600
800
1.000
1.200
1.400
2008 2009 2010 2011 2012 2013E
Recovery
Rate% 51% 46% 53% 53% 52%
Recovery Rate%
29% 27% 26% 24% 22%
CAGR
08-12
21,7%
CAGR
08-12
10,7%
CAGR
08-12
10,0%
19%
44%
Recovery
Rate% 56% 59% 49% 45% 42% 44%
PwC
In Credit Collection business, Collection Effectiveness and the offer of Judicial and Extra Judicial services jointly appears to be the critical KBFs
Section 2.1 – Market assessment
46
5,0 5,0
4,5
2,0 2,0
1,0
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
4,0
4,5
5,0
ResultOn/Off
RecoveryRate
FullRange
Extra-Jud/Jud
BundlleCredit
Info/Collection
Pricing Brand
Key Buying Factor of Clients (index 1-5)
“We need a full range of services from the same supplier, from extra-judicial to judicial phases, to guarantee the best practices management and constantly monitor the progress of each position”
Admin & Finance Chief – Bottling Water Co
" The majority of the players in Credit Collection market, such as Italfondiario, Guber, Jupiter, CAF, Prelios, Fire, Maran and Assicom, guarantee each phases of the recovery procedure with an average of 20-40% of receivables managed through Extra Judicial process and the 60-80% managed through Judicial Process"
Industry Expert
Source: Interviews to Industry experts and Corporate Clients
PwC
Use of external Credit Collection Agency in UK is significantly higher than in the other European Countries, with a growing adoption
Section 2.1 – Market assessment
47
UK Credit Collection Market
• The most mature market in Europe.
• High level of outsourcing – 48% of credit
collected from external Debt Collection Agencies (DCAs) and a growing trend observed compared with the past.
• 500 Credit Collection Agencies on the market. Of the UK companies using their assistance, 63%
cooperated just with one, while the rest used 2 or more simultaneously.
• Key Players: - 1st Credit, €34,2 m revenue - Lowell Group, €101,1 m
- Robinson Way, €30,7 m - Moorcroft, €46,4 m - Wescot, €41,3 m - Aktiv Kapital, €21,0 m
• Key Buying Factors: ‘Success rate’ the most important followed with significant gap by ‘Price’ and ‘Reputation’
47%
50%
57%
31%
48%
33%
47%
37%
42%
21% 19%
15%
0%
10%
20%
30%
40%
50%
60%
Italy UK Europe
Used internal resources for collecting Used external DCA*
Used law office/attorney Sold debts
How companies have dealt with overdue invoices (2013, percentage)
Source: Atradius
Note: DCA = Debt Collection Agency
PwC
NPL Special Servicers apply a fixed fee per position and a variable fee from depending on the type of credit recovered instead External Recovery agencies apply different fees on the basis of the phases of the recovery procedure
Section 2.1 – Market assessment
48
4%
7%
8%
10%
0%
2%
4%
6%
8%
10%
12%
Secured Unsecured
Fees for NPL Special Service (2013, percentage, €/file)
Fixed Fees (€/file)
30-80 € 30-80 €
5%
7%
16%
7%
10%
22%
0%
5%
10%
15%
20%
25%
Mailing / PhoneCollection
Home collection Further HomeCollection
Fees for Corporate % Consumer Finance External Recovery agencies (2013, percentage)
PwC
Market figures Section 2.2
49
PwC
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0% 20% 40% 60% 80% 100%
Financial Institutions represent the main clients for Credit Collection services especially in the Consumer Finance segment while Corporates account only for c. 20% of the market
Section 2.2 – Market f igures
50
Consumer Finance
" Bad Banks" Captive
NPL Servicer
Corporate Servicing Financial Institutions Servicing
Consumer Finance
Banking NPLs
180
Corporate
310 253 CC Market: €744M
Credit Collection Market (2011, €M, percentage)
Source: Annual Reports, UNIREC (Unione Nazionale Imprese a Tutela del Credito), PwC estimate
CC
Corporate Reference Market: €612M
PwC
Over the period 2009-2012, the Credit collection Market experienced a positive growth (CAGR 09-12 +8,8%) especially in the Banking – NPL sector
Section 2.2 – Market f igures
51
152 164 180 192
256 276
311 323
100
107
121
133
0
100
200
300
400
500
600
700
2009 2010 2011 2012
CC Corporate CC Banks - Consumer Finance CC Banks - NPL
Evolution of Credit Collection Market (€M, percentage)
508
547
612
648
CAGR 09-12
+ 8,8%
+ 10,1%
+ 8,0%
+ 8,1%
YoY
Growth +7,7% +11,9% +5,9%
Source: UNIREC (Unione Nazionale Imprese a Tutela del Credito), PwC Estimate
CC Banks +8,6%
PwC
CC market outlook will be primarily affected by the penetration of new Corporate clients, the increase of volume per client and a positive price effect
Section 2.2 – Market f igures
52
Nu mber of Com panies/
Fin ancial In stitutions Number of
Clients
Bu siness Fundamentals
Banks
• N PLs stock/new
• Share of Debt handled by Third Parties/ AUM
• Recovery Rate
• GDP
Corporate
• Days of payments
• Bad Debts stock
• Share of Debt handled by Third Parties/ AUM
• GDP
Penetration
1
Mix Effect
2
Volume per Client
3
Price Effect
4
Average Revenue
per Account (ARPA)
Credit Collection
Market
Ma r ket drivers
x
x
• Spen ding per client
Banks Corporate
Banks Corporate
Banks Corporate
Banks Corporate
Ou tlook 13-17
PwC
Major drivers for future evolution of Credit Collection Market will be the increase of the Volume per Clients primarily thanks to the growth of the percentage of credit outsourced
Section 2.2 – Market f igures
53
Mix Effect
Volume per
Client
Price Effect
Penetration
Banks Corporate
• Mix of pr oducts offered in the CC market a lready m eets the needs of the Banking sector
• No increase in demand for more value a dded
products is expected considering the current level of Ba n k resources
• No m ix effect is expected also considering that no v alue a dded products will be introduced in the
pr oduct offering for CC market
• Use of ex ternal Credit Collection agency in Italy is st ill limited with r espect of other EU Countries within
th e SMEs segments (2012 penetration ~28%)
• Con sidering that Italian market is mainly based on SMEs, big r oom of improvement still exist
• Pen etration level among Financial In stitutions rea ched a lmost 100% leaving almost n o room
for improv ement
• Ex pected growth of the percentage of Credit Collection outsourced will be the main driver of the
in crease in the amount of receivables managed by CC A g ency
• Th is positive effects will be mitigated by the decrease
of th e day of payments and the allowance for doubtful a ccounts linked to the economic recovery
• Growt h of NPLs stock and the recovery rate for ecasted for the next years will increase the
u n derlying market for Credit Collection
• Ex pected growth of the percentage of NPLs h a ndled by third parties in next y ears will also
in crease the amount of receivables managed by CC A g ency
1
2
3
4 • Lim ited Price Increase is expected due to
in creasing stock of A UM (asset under management )
to be managed in a context of limited capacity of the ex isting players in the markets
• Lim ited Price Increase is expected due to in creasing stock of A UM (asset under management )
to be managed in a context of limited capacity of the ex isting players in the markets
Ou tlook 13-17
PwC
Strong increase in NPLs and in Stock of Debts handled by third parties recorded in the last years will continue also in the future but with lower growth rate
Section 2.2 – Market f igures
54
107
125
153
173
190
204
216
50
70
90
110
130
150
170
190
210
230
2011 2012 2013E 2014E 2015E 2016E 2017E
Evolution of NPLs (€B, percentage) CAGR
11-13
+ 19,4%
CAGR
13-17
+9,1%
YoY
Growth +16,8% +22,1% +13,1% +9,9% +7,3% +6,3%
Source: Prometeia, Unirec, PwC estimate
37,8
42,9
47,2
52,0
55,9
58,8
61,4
20
25
30
35
40
45
50
55
60
65
2011 2012 2013 2014E 2015E 2016E 2017E
Evolution of Debt Handled by Third Parties (€B, percentage) CAGR
11-13
+11,7%
CAGR
13-17
+6,8%
YoY
Growth +13,5% +10,0% +10,2% +7,5% +5,3% +4,5%
Note(*) Data includes both Banks NPlL and Corporate Bad Debts. The analysis refers only to
CC servicers associate to Unirec ( 200 companies covering the 87% of Italian Market)
PwC
Economic recovery will bring to a decrease in the amount of allowance for doubtful accounts and the days of payments between Corporates
Section 2.2 – Market f igures
55
8,6
8,9 8,9
8,6
8,3
7,9
7,6
3
4
5
6
7
8
9
10
2011 2012 2013E 2014E 2015E 2016E 2017E
Evolution of Allowance for Doubtful Accounts (€B, percentage)
83,3 85,5
89,2 87,9
86,1
83,8
81,5
40
50
60
70
80
90
100
2011 2012 2013 2014E 2015E 2016E 2017E
Evolution of Days of Payment (Day s, percentage) CAGR
11-13
+ 1,8%
CAGR
13-17
-4,0%
CAGR
11-13
+3,5%
CAGR
13-17
-2,2%
YoY
Growth +3,2% +0,4% -3,2% -4,1% -4,4% -4,2%
YoY
Growth +2,6% +4,3% -1,4% -2,1% -2,7% -2,7%
Source: Cerved Group, Mediobanca, PwC estimate
PwC
Credit Collection Market is expected to grow double digit (CAGR 13-17 +12,6%) in both Corporate and Banking segments aligned to historical growth (CAGR 09-12 +8,8%)
Section 2.2 – Market f igures
56
218 248 273 296 318
380
451
515 575
633 152
183
208
233
256
0
200
400
600
800
1.000
1.200
1.400
2013 2014 2015 2016 2017
CC Corporate CC Banks - Consumer Finance CC Banks - NPL
Evolution of Credit Collection Market (€M, percentage)
750
882
CAGR 13E-17E
+ 12,6%
+ 13,9%
+ 13,6%
+ 9,9%
1103
Sources: PwC estimate
996
1.206
CC Banks + 13,7%
PwC
Competitive Landscape Section 2.3
57
PwC
Supply structure include two type of players: NPL Specialists covering NPLs only (Financial Intermediaries ex Art. 106/107 TUB) and Debt Collection
Agencies covering both Corporate and Consumer Finance services
Section 2.3 – Competitive Landscape
58
Credit Information Market
Credit Information Ba nks Credit Information
Corporate
Bu siness Information* Bu siness
Information Real Estate
Cerved
Credit Collection Market
Credit Bu reau
Rating & A nalytics
Consu mer Finance
Banking N PL
Fin ancial In stitution Serv icing Corporate
Serv icing
Other
Crif
Fire
Italfondiario
Guber
Commercial Inf ormation
Assicom
Creditech Adv isory
Prelios Asset Management
Euroservice
Assets Remarketing
Databank: Marketing
inf ormation Lince Cerved Cerved
Centrale Bilanci
Cerv ed-Experian JV
Cerv ed Credit Management
Finserv ice Cerv ed Credit Management
Cribis D&B
Crif Serv ices
Crif Teleserv ice
Crif Teleserv ice
Marketing Serv ices
Crif Decision
Solutions
Crif Spa Crif Spa
Maran Assets remarketing
AT Credit Management
Adv isory
GeRi
Debt Collection A gencies (DCA s)
Prelios Credit Serv icing
NPL Specia lists
Note: (*) Business Information Corporate also include other products like Real Estate VIPO
PwC
Italfondiario
Cerved
Fire
Guber
Maran
GeRi
Creditech
Crif
Euro Service
Recus Italia
Prelios Credit
Servicing
Assicom
AT Credit
Management
CSS
Intrum Justitia
Archon
Group Italia
FBS CAF
-5%
0%
5%
10%
15%
20%
25%
30%
0,06 0,13 0,25 0,50 1,00
EB
ITD
A%
Relative Market Share (RMS)
Profitability in Credit Collection appears partially driven by experience/ scale economies (captured by RMS), presenting a "large and flat" Normative Band and several Players over-/under-performing the average
Section 2.3 – Competitive Landscape
59
Scale and profitability of Major Players (2012, €M, percentage)
€10M Sales/
Intermediation Margin
Sources: PwC estimate, Aida, Annual report
PwC
Fire and Maran are the main players in the Credit Collection market in Italy; the market is characterised by a number of small companies with potential for consolidation
Section 2.3 – Competitive Landscape
60
Sales of major Players (2012, €M)
36 36
30
25 23
18 17 15 15 15 14
12 11 9
0
5
10
15
20
25
30
35
40
Fire Maran Assicom GeRiGestione
Risparmio
Creditech AT CreditManagement
CribisTeleservice
(Crif)
EuroService
CSS RecusItalia
Jupiter(Cerved)*
Tarida(Cerved)
Finservice(Cerved)
IntrumJustitia
Focus both on
Credit Information /
Credit Collection
Sources: Corporate website, Annual Report, press releases, AIDA
Note (*): Jupiter's Sales expected to increase in the next years thanks to the acquisition of a portfolio of receivables (~5 €B) from Credit Agricole previously managed by Prelios
Acquired by
Cerved Group in
2013
Cerved Credit
Management
9,5 €B of Assets
Under Management
in 2013
DCA
PwC
Increase of sales recorded by the major player in CC Corporate in the last three years is positively correlated with an improvement of profitability
Section 2.3 – Competitive Landscape
61
EBITDA and Sales growth of major Players (2009-2012, percentage, €M)
Note:(*) Creditech EBITDA refer to 2011-2012;
€10M
Sales 2012
Sources: website, Annual Report, press releases, AIDA
Fire
Maran
Assicom
GeRi
Creditech
AT Credit Management
Cribis Teleservice (Crif)
Euro Service
CSS
Recus Italia
Finservice (Cerved)
Intrum Justitia
Tarida (Cerved)
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
-20% -15% -10% -5% 0% 5% 10% 15% 20% 25% 30%
EB
ITD
A C
AG
R 0
9-1
2
Sales CAGR 09-12
DCA
PwC
Credit Collection market for Corporates and Consumer Finance is highly fragmented and characterized by a large product offering in both Judicial and Extra–judicial services
Section 2.3 – Competitive Landscape
62
Fire
Maran
Cribis
Teleservice
AT Credit
Management
Finservice
Intrum Justitia
• Focus on extra–judicial credit collection for Corporate and consumer finance Financial Institutions
• Business Line: Telecommunication, Retail, Utilities, Public Administration, Banking (Pre and Post write-off) and credits related to purchase or securitisation operations
• Part of Crif Group
• Focus on judicial and extra – judicial recovery of consumer finance receivables
• Full range of services for the outsourced management of each stage of credit collection for Corporates, Insurances and Public Administration
• Focus on extra – judicial recovery for Corporate through the services of monitoring of invoices and phone collection
• Judicial recovery services for Corporate and Financial Institutions
• Part of Cerved Group
• Focus on collection of outstanding payments for Corporates
• Extra – judicial recovery consist of phone collection and legal assistance in connection with credit collection procedure
• Focus on credit collection, business and individuals
• Oriented to small medium enterprise
• A wide range of online services in the portal “Intrum Justitia”
• Serv ices: extra – judicial recovery, legal services, Commercial Information and Car repossession
• Main Clients: Consumer Finance & Factoring, Banks, Telecommunications, Utilities, PA and Leasing & Renting Agency
Sources: website, Annual Report, press releases
DCA
PwC
Italian Credit Collection market for NPL Specialist is characterised by few large provider; Italfondiario and Guber represent the two mayor players in terms of Intermediation Margin
Section 2.3 – Competitive Landscape
63
Intermediation Margin* of major Players (2012, €M)
47,2
36,7
14,7
11,6
8,4
4,3
0,9
0
5
10
15
20
25
30
35
40
45
50
Italfondiario Guber Prelios Credit
Servicing
SGC - Archon
Group Italia
FBS CAF Società Italiana
Gestione Crediti
Note (*): Intermediation Margin = Income from Net Fee & Commission Income + Income from Financial Services net interest incom e and other financial items
(**) 2013 Figures
NPL Specialist
GBV AUM** (€B)
34,2 2,8 7,7 3,6 2,1 2,3 na
PwC
Over the period 2009-2012 Guber recorded the best performance both in terms of EBITDA and Intermediation Margin with respect to the other major players in the NPL's Credit Collection market
Section 2.3 – Competitive Landscape
64
Operating Profit and Intermediation Margin Growth of Major Players (2009-2012, percentage, €M)
€10M Intermediation
Margin 2012
Sources: website, Annual Report, press releases, AIDA
NPL Specialist
Note (*): Operating Profit = Intermediation Margin – Value Adjustment of Financial Assets – Administrative Expenses – Amortization & Depreciation
Italfondiario
Prelios Credit
Servicing
Guber
SGC –
Archon Group Italia
FBS CAF
Società Italiana
Gestione Crediti
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
-60% -40% -20% 0% 20% 40% 60% 80%
Op
era
tin
g P
rofi
t %
09-1
2
Intermediaton Margin CAGR 09-12
PwC
Credit Collection market in Banking sector is characterised by few players with standardised services
Section 2.3 – Competitive Landscape
65 Sources: website, Annual Report, press releases
Italfondiario
Guber
Prelios Credit Servicing
Cerved Credit Management
• Focus on extra–judicial and judicial credit collection of secured and unsecured NPLs
• Remarketing of Real Estate assets as collateral for loans
• Services of securitisation of receivables
• Focus on management and collection of portfolios of secured NPLs, mainly mortgage, through judicial and extra - judicial procedures
• Main clients: SPV and Banks
• Focus on credit management & workout of residential and commercial mortgage and small business and Corporate loans
• Judicial and extra – judicial procedures (mainly low cost legal workout)
• Credit valuation
• Real Estate and Goods & Equipment Remarketing
• Focused on credit management and credit collection of secured and unsecured NPLs coming from Banks and Financial Institutions
• Financial Intermediary enabled to purchase non performing receivables (Art. 106 TUB)
NPL Specialist
PwC
Corporate and Consumer Finance segments appears fragmented, while Banking NPL segment is almost concentrated (C4 = 78%)
Section 2.3 – Competitive Landscape
66
193
323
133
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Fire 12%
GeRi 12%
Euro Serv ice 8%
Assicom 7%
Cerv ed (Finservice) 6%
Recus Italia 5%
Intrum Justitia 4%
Maran 3%
AT credit management 3%
Crif (Cribis Teleservice) 2%
Others 40%
Creditech 7%
Maran 7%
Crif (Cribis teleservice) 4%
Cerv ed (CCM) 4%
Fire 3%
CSS 3%
Italf ondiario 35%
Guber 21%
Cerv ed (CCM) 11%
Prelios Credit Servicing 11%
Archon Group Italia 6%
FBS 4%
CAF 3%
Others 11%
Others 67%
Italf ondiario 7%
Cerv ed 6%
Fire 5%
Guber 4%
Maran 4%
GeRi 4%
Others 66%
Creditech 4%
Market Share of Credit Collection (2012 percentage, €M)
€648M
Consumer Finance Banking NPLs Corporate CC Market
Sources: PwC estimate, Aida, Annual report
PwC
Credit Collection market for Corporate is characterised by a large number of small companies accounting for 40% of the market
Section 2.3 – Competitive Landscape
67
Fire 12%
Fire 12%
GeRi 12% GeRi 12%
Euro Serv ice 9%
Euro Serv ice 8%
Assicom 6%
Assicom 7%
Cerv ed (Finservice) 6 %
Cerv ed (Finservice) 6 %
Recus Italia 5% Recus Italia 5%
Others 40%
Others 40%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011 2012
Cribis Teleservice 2%
AT credit Management 3%
Maran 3%
Intrum Justitia 4%
180 193
Cribis Teleservice 2%
AT credit Management 3%
Maran 4%
Intrum Justitia 4%
Credit Collection Corporate – Market Share Evolution (percentage, €M)
Sources: PwC estimate, Aida, Annual report
+ 0,2 pp
+ 0,5 pp
- 0,2 pp
-0,5 pp
+0,5 pp
+ 0,1 pp
+ 0,0 pp
- 0,3 pp
- 0,6 pp
+ 0,3 pp
+ 0,2 pp
Var 11-12
PwC
Credit Collection market for Consumer Finance is highly fragmented with the Top 10 players representing almost the 45% of the market
Section 2.3 – Competitive Landscape
68
311 323
Creditech 7%
Creditech 7%
Maran 8%
Maran 7%
Cribis Teleservice 4%
Cribis Teleservice 4%
Cerv ed (CCM) 5%
Cerv ed (CCM) 4%
Fire 3% Fire 3%
CSS 3% CSS 3%
Others 65%
Others 67%
2011 2012
10%
20%
30%
40%
50%
100%
Intrum Justitia 1%
GeRi 1%
AT Credit Management 2%
Recus Italia 2%
Intrum Justitia 1%
GeRi 1%
AT Credit Management 1%
Recus Italia 2%
Credit Collection Consumer Finance – Market Share Evolution (percentage, €M) Var
11-12
Sources: PwC estimate, Aida, Annual report
+ 2,1 pp
+ 0,3 pp
- 1,3 pp
+ 0,5 pp
- 1,9 pp
+ 0,2 pp
- 0,2 pp
+0,2 pp
- 0,1 pp
+ 0,0 pp
+0,0 pp
PwC
Credit Collection market for Financial Institutions NPLs is consolidated around few large operators with the top 5 players accounting for more than 80% of market
Section 2.3 – Competitive Landscape
69
Italf ondiario 42%
Italf ondiario 35%
Guber 21%
Guber 21%
Cerv ed (CCM) 3%
Cerv ed (CCM) 11%
Prelios credit Servicing 9%
Prelios credit Servicing 10%
Archon 8% Archon 6%
FBS 4% FBS 4%
Other 10%
Other 10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011 2012
121 133
Società Italiana
Gestione Crediti 2%
CAF 1%
Società Italiana
Gestione Crediti 1%
CAF 3%
Credit Collection Banks– Market Share Evolution (percentage, €M)
Var 11-12
Sources: PwC estimate, Aida, Annual report
+ 0,0 pp
- 7,3 pp
- 0,1 pp
+ 7,4 pp
+ 1,4 pp
- 1,9 pp
- 0,2 pp
+ 1,5 pp - 0,8 pp
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