MILAN, Sept 4 (Reuters) - Investment firm Oaktree

Capital Management has struck a deal to sell Banca Progetto, an

Italian specialty finance bank, to funds managed by private

equity firm Centerbridge Partners, the lender said in a

statement on Wednesday.

Oaktree first invested in Banca Progetto in 2015, when the

Italian lender was known as Banca Popolare Lecchese and had a

loan book of just 50 million euros ($55 million). That compares

with 7.6 billion euros at the end of last year.

Focused on lending to small- and mid-sized Italian

businesses, Banca Progetto has increased its business in recent

years by focusing on loans guaranteed by the state, which

totalled 6.9 billion euros at the end of 2023.

Oaktree first started looking in to liquidating its

investment in Banca Progetto three years ago. It has also

explored a potential stock market listing in its search for an

exit.

Banca Progetto reported a net profit of 72 million euros

($79.6 million) last year. Its return on equity (ROE) of 28%

compares with an average of 12.3% for Italian banks in 2023 net

of extraordinary items.

Banca Progetto did not disclose the financial details of the

sale, in which Morgan Stanley acted as a financial adviser to

Oaktree while Kitra Advisory and JPMorgan advised Centerbridge.

Higher interest rates have turbocharged profits at Italian

lenders over the past two years, closing the steep discount to

book value at which shares of publicly listed banks used to

trade.

With a much higher than average ROE, Banca Progetto was

valued in the deal at a premium to its book value of nearly 300

million euros, a person with knowledge of the matter said.

Another two people close to the transaction said the bank

fetched a price of more than 500 million euros.

Centerbridge, which manages $38 billion in capital across

the private equity, private credit and real estate sectors, had

previously invested in the Italian financial sector by acquiring

a stake in BFF, another specialty finance bank.

($1 = 0.9024 euro)