18 May 2021


Winning investment strategies in the NPL market, in the Cover Story dedicated to Pierluca Bottone, CEO of Europa Factor.

Interview with Pierluca Bottone, CEO of Europa Factor

Curated by Gianpaolo Luzzi, Editorial Director of Credit Village Magazine
Pierluca Bottone , CEO of EUROPA FACTOR

Pierluca Bottone, can you tell us something about yourself and the career path that led you to your current role?
P.B. 25 years have passed since, still a young university student, I began my experience in the world of home collection in Citifin, then the first financial company on a global scale. That path, undertaken “from scratch and with zero resources”, led me to first take care of management and, subsequently, to broaden my horizons towards the purchase of credit. Among the professional obstacles I faced in the development path of the company I founded, the real entrepreneurial turning point coincided with the transformation of Europa Factor into a supervised financial intermediary. A challenge won and an important milestone reached, an awareness of one’s own possibilities that allowed the construction of the second financial intermediary: Credit Factor.

You are both Servicer and Buyer, how do you reconcile these two different business lines within a single reality?
P.B. Servicing makes sense not only if it generates adequate economic margins but also when, by keeping performance constantly at the top, the deep trust of client companies is gained. The experience gained in management plays an important role in the knowledge of the market and in the search for the best opportunities for courageous investments. This important element of synergy between the two businesses is an integral part of the DNA of Europa Factor and permeates the strategic pillars aimed at creating value at all levels: customer satisfaction, availability towards debtors, trust on the part of assignors and professionalism of our people allow us to “close the circle”.

Most Debt Buyers acquire portfolios by structuring securitization transactions, while Europa Factor acts directly as a financial intermediary. Are there specific reasons for this choice?
P.B. Compared to the classic investment schemes that place a “cold” securitization vehicle at the center of the transaction, the approach of Europa Factor and its subsidiary Credit Factor favors the direct involvement, and in total transparency, of the investor. Furthermore, since there is a substantial identity between the investor and the servicer, compliance with ethical and deontological principles becomes a prerequisite I would say almost natural, and increasingly appreciated by the originator companies.
Our two entities have the ability to act as an acquisition – each on their own “potential” reference markets – guaranteeing a strong combination between the quality of management and the operational approach that marks the collection activities aimed at safeguarding fairness both towards of the Assignors, both towards the assigned customers-debtors, without losing sight of the effectiveness and speed of results.

from left Valentina Lolli Extraordinary Finance and valuations, Veronica Pace Commercial Development, Federica Bottone Head of General Affairs, Fabiana Fusi External Field, Ornella Pacelli Commercial Development, Raffaella Ardolino General Affairs

What type of credit are you currently focused on and which will you focus on in the future?
P.B. Europa Factor is a leader in the management and purchase of impaired loans in the Utilities and Telco market. He is also a top performer in several qualified sectors dedicated to the management of bank NPEs. Our market positioning with the subsidiary Credit Factor focuses on investing in small and medium ticket portfolios of UTP and NPL mainly unsecured originating from the banking sector, consumer credit and the leasing market.
Our proposition, which focuses on significant and granular masses, characterized by high numbers and small unit sizes, will be the driver of significant growth in terms of market share.

The management of heterogeneous asset classes and originations often requires different structures and skills. What type of operational organization have you structured to maximize performance?
P.B. In twenty years our company has formed and chosen to build “closed circuit” collector groups, that is, dedicated to individual orders. This approach has definitely favored the specialization of the resources who have developed a valuable experience in the various reference markets and in the invoicing processes of the assignors, allowing us, on the one hand, to establish ourselves permanently at the top of the performance rankings drawn up by our customers and, by ‘other, to achieve double-digit ROE as an economic return generated by our investments in NPE.
Our Phone and Home collection structures, entirely based in Italy, are recognized as excellence in terms of size and quality of processes and professionalism, flanked by a qualified Master Legal sector, which is growing rapidly, and by a very professional governance structure that guarantees a data analytics approach that makes the difference.
The intuition for me was, from the beginning, to invest in the training and involvement of my most direct collaborators who over time have become real “travel companions”, as well as talents. Working with them side by side is a real honor for me, as well as a daily pleasure.
Europa Factor has always placed technological development at the center of its strategies, well aware that, together with human capital, the real driving force for the future will come from this factor.
In 2020 we implemented a “distributed” organizational model that also includes decentralized collection platforms, present in the territories of the Center-South with a greater professional vocation, capable of expressing a job offer characterized by considerable availability and significant skills.
The satisfactions associated with this development process have just begun.

How are you managing the Covid emergency?
P.B. The Company was able to respond almost instantly to the work and organizational needs imposed by the health emergency. Remote work has been a concrete reality for Europa Factor for a couple of years already; we therefore moved promptly, with a proactive attitude. The effectiveness of our model was fully confirmed by the recent results obtained: the turnover of Europa Factor in fact recorded an increase of over 25% in 2020 compared to 2019.
As for the delicate management of the relationship with customers-debtors, we quickly made our mindset evolve by formulating specific campaigns in the name of an accentuated willingness to listen compared to the past, focusing on expanding the proxies of write-off and installment payments granted to our collector.

In a market that is increasingly concentrated, what are your strategies for the years to come?
P.B. Stock market listing is certainly one of the options on the table. Europa Factor owns assets in NPL portfolios for 2.6 billion euros from which it will be able to generate prospective collections of 90 million euros over the next few years, through a collection process carried out mainly “in house”.
Furthermore, in 2019 we created an ambitious joint venture with Banca IBL, creating, with the CEO Mario Giordano, Credit Factor SpA (also a supervised financial intermediary) to develop an important investment plan through the purchase of UTP exposures. and unsecured NPLs, originating mainly in the banking and financial sector.
The initiative is giving excellent satisfaction: in 2020 the year closes with a turnover of 7.3 million euros, an Ebitda of over 4.3 million and an investment capacity of 80 million euros in the coming years.
The combined turnover of the 2 intermediaries – Europa Factor and Credit Factor – exceeded 35 million euros in 2020.

from left Pierluca Bottone , CEO EUROPA FACTOR , Stefano Sagripanti , Head of Finance and Markets EUROPA FACTOR

You have carried out mini bond issuance programs in the past years. What kind of response did you get from the financial market? Do you anticipate further emissions?
P.B. The response from the debt capital market and from investors interested in Europa Factor was surprising for us, both in qualitative and quantitative terms. Having positively reached the listing of the two Mini Bonds issued on the Extra Mot 3 segment of Borsa Italiana represents, in addition to an undeniable satisfaction, a new perspective for the funding policies of our company. This first positive experience leads us to continue along the path, intensifying our presence in the DCM market.

How do you see the credit market in the coming years, both investor and servicer and what role do you see for Europa Factor?
P.B. The strength of those who work in this market will increasingly be the result of the effective combination of advanced analysis skills of market segments with their opportunities and a powerful “collection machine”, with strong adaptability, efficient and scalable in a short time .
Designing clear and detailed strategies, in the name of concreteness and continuity, will allow us to better interpret the future scenario. From this point of view, Europa Factor is a player that boasts robust industrial capabilities, diversified references and skills that meet the current and prospective market needs.
I see Europa Factor and its young subsidiary Credit Factor well focused and oriented towards a future stigmatized by 3 “P”: people, passion, performance.

Europa Factor has always placed technological development at the center of its strategies, well aware that, together with human capital, the real driving force for the future will come from this factor.

What are the projects in the pipeline for the next two years?
P.B. Further expand the market shares reached up to now, consolidate the position as leader in the Utilities and Telco market, grow rapidly in the banking, leasing and consumer credit sector. Continue to invest in technology and, at the same time, identify new talents to complement the current ones. All following priority logics of social responsibility based on sustainability.

Could you give us some more details in relation to the following

  • Cumulative Total Ownership Portfolio Purchased: € 3.7 billion; 7.4 million positions
  • Portfolio outstanding at 31 December 2020: € 2.6 billion; 5.5 million positions
  • AUM managed on behalf of third parties: € 2 billion
  • Total AUM: € 4.6 billion
  • Revenue volumes: € 27.5 million (the cumulative figure with the subsidiary Credit Factor reaches € 35 million)
  • Ebitda: € 6.9 million
  • Net profit: € 1.6 million
  • Any notes on subsidiaries / associates:

    • Total cumulative purchased portfolio: € 577 million; 364 thousand positions
    • Portfolio outstanding at 31 December 2020: € 532 million; 339 thousand positions
    • Revenue volumes: € 7.3 million
    • Ebitda: € 4.3 million
    • Net profit: € 3.1 million

Do you resort to outsourcing? If so, with what strategies?
P.B. The outsourcing of collection services covers approximately 10% of the cash flows generated by Europa Factor. The strategy today provides exclusively for targeted credit lines aimed at serving specific needs, through the use of loyal agencies that guarantee the required quality standards. The structures on the market that are able to deal with even the most laborious recovery of NPLs that can become authentic partners with whom to share strategy and results are welcome.

Could you give us some details in relation to your partnership with IBL Banca?
PB The joint partnership allows Credit Factor to project itself into the reference market with the financial strength of the Bank and the operational liveliness of the Europa Factor servicer. The development plan of the joint-venture will, in a short time, make Credit Factor a subject that will enjoy a clear, strong and recognized market positioning.

And now, to conclude, if you allow me, I ask you a somewhat frivolous question… If you can choose to invite anyone in the world, who would you like as a dinner guest and why?
P.B. Adriano Olivetti and my Father. Olivetti was an ante litteram supporter of a responsible and socially sustainable business model, an example that today needs to be recovered to invest as companies and as a country system. While my father was my father, and to him I owe the values ​​that guide me today in my daily choices.

(Download the interview in PDF format)

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