doValue S.p.A. (DOV) Earnings Call Transcript & Summary

Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the coeo Acquisition Investor Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Daniele Della Seta, Head of Group M&A, Strategic Finance and Investor Relations of doValue. Please go ahead, sir.

Good morning. I'm Daniele Della Seta, Head of Investor Relations and M&A at the doValue. Thank you for joining us on this call to present doValue's acquisition of coeo. As said of [indiscernible] doValue, I'm truly proud of this transaction. One, we have purchased with determination and strategic intent of flight on time. As the company's investor relations, it's a real pleasure to present a transformative deal that prepares the value to lead decisively in a dynamic sector with strong long-term growth and expand significantly our geographical footprint. In an era of rapidly evolving consumer behavior, digital platforms are increasingly central to commercial and financial transactions. Consumer lending is seamlessly integrating with point of sale systems through digital payments, while e-commerce drives the shift towards fully digital experiences. This acquisition will allow us to thrive in this dynamic market and be equipped to effectively manage and support this digital-first integrated lending ecosystem to be the relevant player for receivable management. I will now hand over to our CEO, Manuela Franchi, who will dive into the strategy behind these acquisitions and what we expect to gain from it. After that, our CFO, Davide Soffietti, will break down the financial rationale. Then we'll open it up for a Q&A session. Now over to you, Manuela.

Thank you, Daniele. I'm truly delighted to introduce coeo to you. This transaction marked a pivotal milestone in our strategic journey launched in 2024 to position doValue as the primary financial service provider of the future. This acquisition radically [ efforts of ] doValue, enhancing our long-term sustainable growth and profitability. After the acquisition of Gardant that enabled us to merge two sister companies in Italian market while announcing on an organic basis, all other level of growth on the bus side, currently represents the ground for secular growth. Carrying the world enabled and digital connect claims management platform with a leadership position in e-commerce, Buy-now-Pay-later and e-mobility sectors in DACH, Belgium, Netherlands, U.K., Nordics and other Western European countries. This acquisition is in line with our business plan strategy as it contributes significantly to reintegrate both to site and sustainable in the long term. It broadens doValue's product offering into digitally originated consumer receivables, materially expanding our non-NPL franchise. It expands our footprint in Continental Europe timing doValue in real European financial service providers, offering great opportunity for coeo to expand its digital claim management business in Southern Europe. And doValue to expand its traditional NPL business to promising and other penetrated markets, such as Germany, U.K. and the Nordics. It finally takes our digital transformation to an unprecedented level with the state of the art of digital platform and in-house AI capabilities. As you can see on the slide, coeo is a leading position in e-commerce by [indiscernible] brings in a relationship with global bluechip clients, offering client centricity enabled by advanced digital capabilities. Specifically, the growth component of coeo will enable us to elevate the value for sustainable around certain growth as the financial service provider. While Gardant transaction was about scale in our city markets and synergies, coeo about transformation growth and diversification. It will be a transformative acquisition by contributing approximately 40% of revenue and 45% of EBITDA for 2024 aggregated figures for our business. You might wonder it is too soon for another acquisition following the Gardant transaction. But let me assure you, we are well ahead of scaling Gardant integration, set to be fully completed by end of '25. We have been closely tracking the coeo opportunity for the past 3 years as the CapEx fits for doValue and now the time has come to finalize it. We fully believe now is the optimal time to accelerate our strategic vision with the acquisition, capitalizing on the unique opportunities to strengthen our position and drive long-term value. We truly believe coeo market trend and be leading its future evolution and will create the basis for it. With regard to integration, we will keep coeo as a separate business unit. It will be our brand for tech-enabled to cater in receivables management across Europe, including Italy, Greece and Spain and the center for all of the Europe. We are very happy that the management of coeo supports this vision to the point that they decided to invest along with the value all their directive proceeds in order to be part of this journey ahead. They are [ expediting ] model increasing team, which we have known for many years and appreciated how they contributed to the company growth, building upon strong client services and relationships. Let's now move on Page 4 to summarize the key terms of this transaction. We will purchase coeo for EUR 350 million component to be paid in '28 subject to achievement of certain financial targets. We will receive by closing the proceed from the sale of the back-book of receivables than on the balance sheet for around EUR 60 million to EUR 70 million, reducing the value to around EUR 280 million. We will acquire 100% of coeo apart from the state that the management will invest, funding the transaction with EUR 325 million of bridge-to-bond to be reduced by the amount received from deposits from the portfolio. The EU component payable on coeo exceeding our buyer case expectations will be funded by the company's present cash. As previously mentioned, coeo's current management is fully aligned with the, since they will go as a significant part of their investment, which shows a strong commitment and key management and talent. We expect the closing to happen by the beginning of '26. The transaction at attractive financial profile. First of all, it accelerates doValue growth, elevating the group to a long-term sustainable company. The deal is accretive from the very first year with double digit accretion in '26, exceeding 30% in '27, excluding synergies. We confirm our dividend policy of 50% to 70% of net income, excluding the recurring guidance following the transaction, as well as the 2026 dividend distribution. The higher aggregated net income will lead to a higher capital return to our shareholders for the mid to long term. We continue to be financially disciplined and in the context of this transaction, our net leverage will increase only slightly to 2.5x at closing on an aggregate basis from 2.3x as of first '25, a target of 2x at the end of '25 with a deleveraging up following the transaction, expecting to reach 2.2x in '26 and 1.7x in '27. This means that despite the acquisition, our net leverage guidance for '26 will be postponed by only one year. We expect the range to appreciate our transaction, especially on the business profile side while being neutral on the financial profile. Let's now turn to Page 5 for the [indiscernible]. coeo is a leading techpower digital claims management platform, highly digitized and focus on global blue chip clients, providing high volumes of small tickets originated notably through digital channels, such as by now related e-commerce, e-mobility and utilities space. The company has a customer-sensitive model, the led to superior customer experience underpined by cutting-edge technology, fostering the deep client relationships which contributed significantly to its past organic growth. In this coeo expanded into new geographies, mainly with a greenfield approach by following its clients upon their growth plans, which shows the strong client relationship they have as well as the opportunity to further expand in Southern Europe. The company has grown and is now operating in 8 countries, mostly in DACH, Belgium and Nordics and currently employs 700 people. The expansion has been driven by clients asking them to support their business in other countries. So growth was organic and funded by client projects. Prior digital platform has embraced machine learning and artificial intelligence waiting for the ChatGPT moment. There's a capital AI initiative called cAI, which is a key pillar of its future strategy and is clearly to be enrolled in 1 platform in the digital train management and BPO, offering services along to the parties and become the center of excellence of AI solution for the doValue Group. The strong combined position and strategy of coeo is reflected in its strong financial track record of growth, double-digit growth on both top line and EBITDA providing that growth is also very profitable with acceleration in profitability in the past 2 years. You see the figures, which represents also coeo model. The targets we are building are without the portfolio. That's why there is a change for 2025 and '26, which we will explain later. Let's now move to page 6. coeo has a redefined client relationship transforming their business in a customer layering, which is an radical shift from our traditional servicing business. Indeed, in traditional servicing successful clients is defined by the amount and speed of collection, where science is not the better, but the best for the investor. The client figure is represented by the portfolio owners, while the relationship with investors and as soon as the loan is collected and the commission go. In the traditional recovery process, the depth of digital experience is increasing, mainly through our digital platform. But the big booking nature of each case decreases the scope of digital experience. By a radically-differed approach in its digital receivables management. In this process debtors are considered ongoing live customers with potential for long-term recurring business, receivables therefore become opportunities to build trust, to offer a positive feed and great brand value. Indeed, the improved brand perception of the owner is fundamental for increased fidelization of clients. So coeo, therefore, doesn't only promise a recovery rate, but huge importance is given to customer retention, happiness and convenience throughout the process. coeo's customer satisfaction is extremely elevated, thanks to their focus on transforming the receivables management process into a smooth, positive and digital-native experience. This competitive strength led coeo clients to extend their partnership with the company across borders, rely on coeo to expand to new countries in Europe and showing interest to further expand in Southern Europe where we are already present as well as U.S. and Canada. If we go to Page 7, we can see how doValue and coeo differ significantly in their business model, which is one of the key attraction of this deal. The business are fully complementary. As you very well know, doValue mostly focused on large secured NPL exposures originated by financial institutions, while coeo manages mainly high-volume small tickets originated natively through digital channels from nonfinancial institutions, which are mostly digitally oriented and originated. With business origination, doValue works with big portfolio via securitization or bank stock with long weighted average life and long-term contracts. coeo has a stable recurring monthly flow from the repeat customers. On the workout process, doValue applies bespoke recovery strategies to asset monetization, targeted negotiation and judicial and out-of-the court [ methods ] with individually negotiated team. coeo follows standardized digital AI-enabled and fast processes with fee determined by law in a very stable regulatory environment. coeo operates an innovative hybrid model for managing the receivables on behalf of its customers. Here is how it works. coeo processes claims for its clients over a set period, typically 3, 4 months. At the end of this period, coeo has the option to purchase any remaining and outstanding receivable at a predetermined price for its customers. The receivables have low average ticket size and are preprocessed during the initial phase, enabling coeo to recover the full purchase price within 12 months. coeo model is self-funded, meaning it does not rely on additional debt to finance the purchase of receivable. The fast turning nature of the receivable, quick collection cycle supports this and closes the process within a short period of time. What truly differentiates coeo model is that even after the receivable are purchased, coeo continues to generate significant servicing fees. This fees are paid directly by the end customers. This ensures a stable and recurring revenue stream while maintaining a lean asset-light structure. Given the high velocity of coeo receivable purchased under the hybrid model, doValue maintain an asset-light status with this acquisition. Nevertheless, we have reached an agreement with a third party, which will support us to purchase outstanding and future receivable from coeo to an SPV on a recurring basis. The SPV would take ownership of the receivables, while coeo retains the role of servicing, managing and collecting on the receivables in a tightly integrated model, very similar to the target asset management model that we are deploying with the [indiscernible]. All pieces of our journey since my appointment have been linked to each other and have been built to allow doValue to be leading this industry going forward. Moving on Page 8, we can see that the acquisition is highly strategic and attractive for our shareholders due to its value creation potential, but also for our debtholders due to the attractive financial profile of the deal and to a higher degree of resilience coeo brings to the table. The acquisition diversifies doValue business in 3 ways. Firstly, it provides significant expansion into the nonfinancial receivables segment, in particular tickets originated natively digitally by global blue-chip clients with whom there are highly productive close relationships. Secondly, it provides access to the attractive structurally growing market of Buy Now Pay Later and e-commerce. This space has strong fundamentals and sustainable long-term growth prospects in the recurring revenue stream, which are not tied to any of the macro dynamics, which determines [ NPL flow ]. Finally, geographical diversification into high-volume markets such as Germany and Continental Europe creates significant opportunities for doValue to expand its traditional services to the new markets, especially Germany, where NPE ratios are on the rise at the fastest pace across Europe and for coeo to start operating in doValue core markets. All these factors elevate doValue for sustainable long-term high growth on a pan-European basis as financial service provider. With regard to the digital transformation, coeo's highly advanced digital strength can leverage the accelerated development of digital platform, enhance efficiency, scale and cost control across [ coeo ] group. All these benefits come with an attractive financial profile. The deal will generate value from day 1 with EPS accretion expected to be in excess of 15% in '26 and over 30% in '27. And with deleveraging down from aggregated 2.5x post transaction in '25 to 2.2x in '26 and 1.7x in '27 with minimal integration risks and strong complementarity across product, geographies and clients. We will go through this point in more detail in the following slides. Moving on Page 9, we look at the end market. In fact, with this acquisition, we will not only benefit from diversification, but we will also get exposure to high-growth markets, such as Buy Now Pay Later and e-commerce, which will positively drive the group growth in the long term. Indeed, an absolutely key part of the transformative nature of this acquisition is that it elevates doValue in the company's long-term growth, predictable and recurring profile. The [indiscernible] coeo is the main reason for this. The underlying drivers of these high-growth markets are structural in nature and ensure the long-term growth trajectory. As drivers, we see changing customer behavior and demand, favorable adoption dynamics from both consumers and retailers and regulatory changes for the benefit of consumers among others. Estimates show the positive long-term growth of this market with e-commerce revenue in Europe projected to grow at 6% CAGR in the next 3 years. And Buy Now Pay Later expected to grow at a 9% CAGR over the same time horizon. Buy Now Pay Later is gaining the market share in key markets like Germany, U.K. and Netherlands with long-term growth of 8% to 10% and is expected to materially pick up in doValue core market in Italy, Greece and Spain. Importantly, these markets are completely uncorrelated from NPE dynamics and flows, and they have a growing sustainable opportunity to our business. Moving to Page 10. Let's focus on diversification, a key benefit of this acquisition. In this with coeo, we will diversify the growth in terms of asset class, client segments and geographies, making doValue much more resilient [indiscernible] from banking dynamics while also entering markets with large underlying growth opportunities. As part of our business plan diversification strategy, doValue effectively diversified its business, reaching 35% of group revenues from non-NPL in 2024. This transaction will take our portfolio diversification to a new level, reaching 50% of non-NPL aggregated revenues at closing, thanks to the significant share of digital claim management under new segment reporting post transaction. This allow us not only to achieve but surpass ahead of time our '24 targets of 40% to 45% of revenue from non-NPL business, where we were already 59% on the first Q of 2025. If we look at client diversification, doValue currently exposed mostly to investors, which makes nearly 90% of our revenues. coeo on the other side, service mostly e-commerce and payment solutions, which make nearly 90% of its revenue. The new doValue will benefit from these high-profile global clients while also reducing client concentration, exiting bank exposure to 64%. Finally, looking at geographical exposure, as you very well know, doValue is concentrated in Italy and the Hellenic Region, which make up 90% of '24 revenues, while coeo brings strong DACH and Benelux presence, leading to a more balanced combined footprint and to break in market opportunities. Moving to Page 11. We dive deeper into the great opportunity offered by the diversification of our client base by adding new blue-chip clients with a global presence from high-growth sectors such as Buy Now Pay Later and e-commerce. Indeed, coeo has exposure to high-growth Buy Now Pay Later and e-commerce with expected growth of 9% and 6% for these 2 categories. These 2 sectors are expected to grow significantly as the economy expands. However, as penetration of Buy Now Pay Later in most of the European countries is still low, Buy Now Pay Later is expected to grow even assuming flat e-commerce subsequent to a possible recession. Therefore, exposure to this segment will enhance the resilience of our traditional business, making it less sensitive to economic fluctuations. What we see is an even bigger opportunity to apply coeo's business model to doValue region where the Buy Now Pay Later is booming. Growth rates of Buy Now Pay Later in Italy and Greece are 11% and 26%, respectively, which you agree with me are extremely attractive. Beyond e-commerce, coeo brings high profile clients across utilities, telecom, financial services as well as some other clients. coeo was able to grow organically its client base and achieved a remarkable 29% annual growth in new file in the past 5 years. On Page 12, in terms of asset classes, we see clear advantage from the acquisition that go beyond the geographic diversification, in particular, from cross-selling. From a geographical diversification perspective, the acquisition will help doValue export its current products in coeo core markets and strengthen its position as a leading pan-European financial service provider. We will be present in 8 out of 10 top European NPL markets by banking stock. If we look at total stock, we would also Greece in the picture where we are market leaders. doValue has an established leading position in Southern Europe, being the market leader in Italy, Greece and Cyprus and holding a relevant presence in Spain. coeo is active in 6 of the top 10 European markets ranking fourth in Germany, where [ NPEs ] are increasing significantly and doValue traditional business can seize significant opportunities. From a group cross-selling the fertilization perspective, coeo business and capabilities complement doValue, and this acquisition will unlock significant strong fertilization opportunities for us in all aspects. Despite this evidently large opportunity, we very conservatively did not include any revenue synergies in the deal evaluation in all this sizable [ upside ]. Now moving to Page 13. We view the acquisition as a key accelerator of our digital transformation by using coeo's strong tech and AI capabilities. I'm incredibly excited by what coeo can offer us on the AI side based on what they are already doing with their customers in their labs in Berlin and London. coeo's digital debt collection process combines AI-driven automation, installment payment option and machine learning for decision-making, enabling the scalable, transparent and personalized management from amicable phase through legal phase and long-term monitoring. The digitalization rate of coeo has steadily increased from 48% in '19, 65% in 2024 with a future target of more than 85% of total [ files resolved ] completely digitally, driving efficiency and margin. coeo leads the peer group in digital efficiency, reflecting superior automation and efficiency. On Page 14, we dive deeper into coeo AI platform and how it will take doValue digital platform to the next level. Combined the tech capabilities of doValue and coeo, we lead to [indiscernible] digital platform able to serve all type of tickets across several European jurisdictions effectively and efficiently. coeo is focused on small tickets and very high throughput with fast resolution time and recurring high volume. Combining the 2 platform will create efficiency on both ends. coeo platform leveraged conversational AI, intelligent automation and AI-driven compliance tool. coeo automates over 50,000 e-mails and more than [indiscernible] annually with 70% automation target for '25. coeo [ AI ] received 640,000 inbound calls where 60% are answered in an automated manner with the goal to increase this to 80% in the future. It's clear that the capabilities offered by cAI will structurally transform our digital platform and our competitiveness in the nonfinancial receivable in our core markets. Now that we have [ followed ] the strategic rationale and the key benefits of this acquisition, I will leave the floor to Davide, who will take you through the financial details of the transaction.

Thank you, Manuela, and good morning to all. I'm really enthusiastic to take you through the financial details of the transaction. Let's go to Page 15. That's where we can see that the acquisition is very attractive from multiple financial perspectives. First, coeo has experienced strong top line growth of 26% per annum over the last 2 years, driven by exposure to high-growth end markets such as by Buy Now Pay Later and e-commerce, as Manuela previously mentioned. The EBITDA growth has been even more impressive at 34% over the same period of time, showing the scalability of the platform enabled by coeo's cutting-edge AI system. Second, the acquisition is transformative for us, adding nearly 40% of our revenue and circa 45% of our EBITDA in 2024. Third, we expect it to be high EPS accretive from 2026, which is expected to be the first year of consolidation with double-digit accretion in 2026 and over 30% accretion in 2027. This will lead to higher absolute capital return for our shareholder, considering our current dividend policy mentioned in the beginning, which is confirming. Fourth, we see a [ clear ] path to the level with aggregate leverage increasing [ only slightly ] to circa 2.5x at closing, a limited increase versus the 2.3x at Q1 2025 and decreasing roughly to circa 1.7x in 2027 and delaying the 2026 guidance of 1.5, 1.6x by only 12 months. Considering the size and the magnitude of the transaction, we believe this is a remarkable achievement that confirms our attention to the needs of bond share and bondholders. The rights issue executed in December has allowed us to double the size of doValue by consolidating a market, building a completely new vertical with leverage very much under control and below our peers. Rating agencies have appreciated the strengthening of the business profile of the group while keeping a conservative financial profile with an asset cash flow dynamics as shown in 2024 and during the course of 2025. It will continue going forward. Moving on Page 16, we have an overview of what our financials will look like after closing on the transaction. Gross revenues for 2026 are projected at circa EUR 800 million, up 30% versus our previous guidance. EBITDA is expected at around EUR 300 million. Financial leverage is expected to decrease to around 2.2x by the end of 2026, which show the quick deleverage path. Most importantly, our long-term growth profile will be increased, thanks to the exposure to new segment and markets. To sum up, doValue will be bigger, lighter and faster. Let's move to Page 17. Post the acquisition, we will retain a very solid and sound capital structure, ample and well-diversified liquidity sources post closing with the new financing package of around EUR 325 million, coupled with the improved free cash flow for 2025, 2026, providing solid coverage for the amortization of the term loan. There won't be any refinancing risk [ to meet ] in the 3 years post acquisition with limited debt repayment over that period. Now on Page 18, we have the time line of the acquisition. We are delighted to have reached this moment and be able to announce the acquisition to all of you. The next step is filing for regulatory authorization, which we expect to be by December this year. What is more important is that we don't foresee significant execution risk seen. As per our council, there are no antitrust filings required, which simplify significantly the process. The closing is expected by January 2026, which will also allow us to show the market a full year of delivery on our targets before [indiscernible] in our numbers, something we are very committed to. Overall, we expect a very streamlined process up until closing. Let me now pass the floor to Manuela, who will offer her final remarks.

In summary, we strongly believe that this transformative acquisition will accelerate doValue's strategy by adding significant sustainable long-term growth, completely transforming doValue business through significant diversification and offer unparalleled opportunities to superior digital capabilities. While we continue to commit to deliver on our current target, we believe this is the right time for this new challenge, and we are assured that all of this is set for a successful integration. Not only our shareholders will benefit from a higher absolute dividend, but also bondholders will benefit from a more resilient business through diversification and with the leverage. Next step will be to proceed to regulatory approvals and new bond issuance to refinance the bridge facility either before or after closing. Moreover, this transaction fits in the context of many milestone of 2024, '26 business plan achieved already and including new business acquisition much ahead of stated targets for '24 and '25. We are confident with also our new guidance of EUR 12 billion for this year, enhanced cash flow generation, business diversification already at 59% of revenues in the first Q '25, strong capital structure. Finally, let me thank you for participating to this call and allowing us to share these exciting transformative opportunities. We are happy to take any questions you might have. Here at doValue, we are very excited about engaging with the new project and opportunity and welcome our new colleagues to the group.

[Operator Instructions] First question is from Tommaso Nieddu, Kepler Cheuvreux.

I have three, if you don't mind, please. The first one is on synergies. So it looks like a transformative deal and where revenue synergies should be substantial, especially if you will manage to expand the nonfinancial receivables business in South Europe. So my question is, how do you expect to do so? So expanding the coverage of current coeo's clients in Southern Europe? And if yes, have you already engaged in discussion with coeo's clients? And still on clients, sorry, what is the concentration there? The second question is on the EBITDA. New guidance for 2026, I read that should be around EUR 300 million. But looking at your previous guidance at EUR 240 million and EUR 250 million seems to have an increase of only EUR 55 million, while coeo was making EUR 75 million in 2024. So can you please clarify this? If I missed it, yes, please. Is it for the offloading of purchases? And then just the last one very quickly. On the figures you provided, can you give us more detail on the assumptions behind the EPS accretion, please?

Thanks, Tommaso, for your question. On the synergy side, we have not included this assumption to be conservative, but we see a great opportunity to develop the business model in the countries where we operate, where these segments are growing significantly and where the clients of coeo are already present. We have spoken to their clients and the clients have asked them in the past to work in the countries where we operate. coeo has the pleasure to have to say no to some of the clients when they proposed to move to other countries. In fact, in the past, they always grew apart from a couple of cases through start-up following the business opportunities the clients were offering. So to answer your point, we definitely think that we will develop this business in our countries. We didn't want to give figures at this stage because we understand that this is a transformative deal that the market needs to understand in it's all -- in its current status, but there is much more we can build on top of it. In terms of concentration, their main segments are e-commerce and Buy Now Pay Later. The major client compared to all the others is Klarna that has a 10-year relationship with them. And Klarna would like to bring them to different geographies. But this is applicable also to the other clients in the list. It's just the first one in the list. In terms of guidance, let me explain you a bit better the numbers. We reported numbers for 2024 of EUR 75 million. This includes both the hybrid model. So both the servicing and the purchase of portfolio model. If we exclude it, we had around EUR 50 million, EUR 55 million of EBITDA for only the purchasing. We haven't separated officially because it's from an accounting perspective, unless due to the separation, there are pieces influencing each other. So we wanted to report the official numbers of the company. What we have included for the 2026 is our lower end guidance to be on the conservative side, both for us, so the EUR 240 million and also for our expectation for coeo. This means that clearly, there is upside potential as we have indicated both for us and for them. Another point to take into account, which I mentioned during my presentation is that the multiple related to this acquisition has to take into account the netting off [ the doValue ] portfolio. So to subtract from the headline figure, the -- around EUR 60 million to EUR 70 million value of the portfolio that will be already sold at closing. So the net value is more around EUR 280 million. So a multiple which is around 5x. Davide will address the EPS question...

EPS, as we mentioned during the presentation, we have calculated before the [indiscernible] calculated at closing because the company is growing a lot, the cost of good will be higher. We don't expect higher [indiscernible] higher amortization cost. And on the debt side, the assumption was conservative, was 6.5%. But as you know, today, we are -- our bond is trading much better. So also on this side, we were very prudent, and we could have an upside when we issue the bond.

The next question is from Gabriele Venturi at Banca Akros.

I have two questions on my end. First one, what is the actual cost of the debt used to finance the transaction? Second one, if you see any risk coming from regulation regarding Buy Now Pay Later sector that could impact future volumes?

On the debt, we have financed the transaction with a bridge to bond. We have the possibility to also take it as a loan for 5-year duration. We will, however, try the bond market first, tying to lessen also maturities of our debt. We can either access the market before or after closing and keeping [indiscernible] the proceeds. We have tried to cover the size given that the cashing of the purchase of the portfolio will determine at closing based on the composition of that portfolio at closing. So the final net amount of the debt rate will be the final debt point. But we closed [indiscernible] with the current funding. The regulation on Buy Now Pay Later will impact our clients, but our clients have pretty much regular local regulation. So they follow this trend and they're already clear what is the impact. So they don't see negative business dynamic. Obviously, they are equipped to face the requirements of the regulation. On the flip side, coeo is -- received fees, which are paid directly from the customer, so the debtor. And this is regulated in all the countries. The latest regulation has finished beginning of this year in Germany, increasing the fees by 6% to coeo, which is not included in our figures. So it will be an upside.

Next question is from Simonetta Chiriotti, Mediobanca.

A couple of questions from my side. The first on the timing of the conclusion of the impact of the acquisition. So I suppose it will be consolidated starting from January 2026 and also the impact in terms of cash out should be expected at this time? So this is the first question. The second is on the relationship with customers of coeo. So which type of contracts do you have? Long term contracts from -- with all of them or amount of receivables to be worked out? And I didn't catch the number of concentration, customer concentration so the impact of the first customer. And finally on competition. So if you could highlight which are the main competitor of this company.

On the timing side, we have indicated beginning of '26. So we did close 2025 with no consolidation. As we mentioned, we are not worried about the regulatory approval. They are not filling with the local regulator. We don't have an antitrust approval here. We will show the delivery of our plan for all [indiscernible] and we are well on track on that. As I made reference also to our business development targets of the EUR 12 billion where we are very confident about as well as the cash flow generation that we are all focused on. So the target for this year of leverage of 2x is confirmed, and you will see it clean before we start consolidating the coeo. On the relationship with customers, we call customers, the borrower in this case and clients, the operators with whom we have the contract relationship. The type of structure of this [ service ] contract is different from the one we have on the traditional business. [ These aggregated ] contracts that renew continuously with early notification period. But these companies are fully embedded in the marketing process of the operator. So in the website of the clients, we already see the coeo partnership. So -- and they are impacted in the process of recovery of [ the file and all ] efficiency of also the client itself. In fact, the demonstration of this superior performance has been evident from the fact that the company has grown in the last 3 years in 5, 6 countries led by the customers' request to expand. In terms of concentration, in that case, the first customer is [indiscernible], which has a significant number of pipes provided to them, taking into account that the difference from our clients, we are talking about an average ticket of EUR 200 compared to more than EUR 100,000 for our traditional business. It's a very repeat business for them. And compared to our overall customer compensation, they will not be in the top league even if they are [ in the top with ] coeo. In terms of competition, these type of clients usually run a champion-challenger type of model. So you have usually a second operator which work for the same client, which has a lower number of files. And in the geographic development of coeo in the other regions, they started challenger, and they became pretty much always a champion due to their operating performance. Clearly, in Germany, they are the champion. The direct competitors are companies similar to them. So native digitally and used to manage digital collection because their clients are not digitally like e-commerce and Buy Now Pay Later operators.

And a follow-up question, if I may. You provided the growth rate, including the portfolio. Is it possible to have an idea of the service part? So how much -- which was the growth profile excluding the investment in portfolio?

You mean historically?

Yes, historically.

[indiscernible] obviously already seen. In the past, the servicing business has been growing more than the portfolio side because their core business is obviously on the servicing. The collection part is the instrumental to the servicing. So there are -- growth on the servicing side has been more than 50% throughout the last 5 years.

Next question is from Davide Giuliano, Equita.

I have some. The first one is on the pro forma leverage of 2.5. Can you give us some details on the assumption or any specific items under which you calculate the pro forma leverage? I mean, in terms of NFP and EBITDA, also including the proceed that you expect to receive from selling the portfolios to maintain a capital-light business model? The second one, again, on cash generation. Looking at the future, can you give us more details on the items between EBITDA and the free cash flow exclusively on the target company that you expect in the coming years? And the third one, regarding the conversion to the asset-light business model. How does the agreement with the investor who will buy the exposure work? And will it also automatically buy future exposure? And also related to this point, don't you think that separating the purchase of portfolios from servicing can be a disadvantage compared to current, let's call it this way, captive business model? And also your main competitor is also a market leader in this geography and already active in small ticket unsecured and is rolling out its own digital platform for collection, which at least to me, seems the same of coeo. How do you see competition evolving on this front? And in terms of market share, how coeo is positioned within the market?

Okay. [ Davide, I will ] take the first question you asked on the leverage. The assumption is, as we mentioned, but based on aggregation number from coeo 2025 plus doValue stand-alone 2025, our guidance. We are assuming, as Manuela mentioned that the portfolio of coeo will be sold at closing of around EUR 60 million to EUR 70 million. So this is why the debt will be lower amount. This will be cash available in the target. These are the [indiscernible] combined the 2 company, 2025 doValue and 2025 coeo numbers that will be expected as we mentioned around -- with our portfolio included in the guidance we gave. In terms of cash flow, that company produced the item below the EBITDA. They have, for sure, as we have certain CapEx for the investment they run for their AI capability. And then we need to consider also the impact of the portfolio sale because as you also -- your question, the move to the asset-light model, coeo will not only sell the portfolio, the back book at closing, but will also continue to have this partnership with the investor on a [ rolling ] basis, selling to the investor, the portfolio monthly by monthly. So this will have an impact on the cash flow because our now the investor will need to have its return. It will impact the cash flow. So this is why the conversion could be roughly of EBITDA of -- 45% to 50% of the EBITDA will be converted into free cash flow.

On the question on the business model, we have always pursued an asset-light model, and we don't -- we didn't want to mix our model with the purchasing. That's why we have chosen investor, which very -- works with us in a very close manner, which allow us to keep the advantages of the tight relationship with the portfolio of the clients give us the possibility to bring back the model if we wanted to and take [ further flow ] also for the future. So it's a very flexible arrangement that we have built with it to maintain the beauty of being a pure servicer. Compared to our peers, I'm very glad to say that our peers is not Intrum in this case. They don't have our customers. And when they try to compete with these customers, coeo always one, in fact, they're not servicing these clients. They offer a completely different and more evolved product. You should look into what their product is and our product is. We are offering a servicing experience, which is for a different psychology of end customers. And this is the main difference. In fact, I wouldn't mention Intrum as a competitor of coeo. There are other needs that are well less known to the market because they're usually owned by private equity firms or they are start-ups. So we are not doing the same as others in that sense, which are listed today.

Next question is from Davide Rimini, Intesa Sanpaolo.