Due diligence

The due diligence process is aimed at evaluating individual loans and loan portfolios.

The task is carried out by applying different methods depending on the type of asset in question (mortgage/unsecured) and its status (non-performing loans / sub-performing / performing). Analysts, loan managers, lawyers and real estate appraisers are all involved in the process which includes the following steps:

Statistical Analysis

  1. Secured loans: selection of sample loan from the portfolio to be analyzed so as to set the follow-up operations.
  2. Unsecured loans: estimate of expected cash flow and timing by applying analytical models based on   those recovery curves which are the most suitable for the portfolio under management.

Data Room

  1. Secured loans: examination of the documentation relevant to each single position  and subsequent uploading of specific data onto the management system so as to achieve an estimation of collections.   
  2. Unsecured loans: sample verification of the data transferred in electronic format and control of the files.

Evaluation of guarantees and other support information

The data uploading processes starts up a collateral evaluation that, according to the type of portfolio under examination, covers real estate assets, commercial and / or income or investigations aimed at verifying the traceability of the counterparties.

Cash Flow and Pricing

  1. Secured loans : Drawing up of a detailed business plan for each position analyzed (estimate of collections, expenses and the related timing), the business plan drawn up by the managers is compared with those generated by complex mathematical algorithms built upon assessment processes carried out over the years and constantly updated to reflect  market conditions.
  2. Unsecured loans: adjustment of the preliminary statistical estimates based on results taken from data room activity and in-depth collateral evaluations on the expected cash flow and timing through the application of analytical models based on those recovery curves which are most suitable for the portfolio.

The estimated  value of the portfolio is based on the forecasted  cash flow  according to assumptions which have been shared with the Principals.