Banking M&A Digest #15

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Lonely Businessman Alone in the Beach

About anyone and anything anywhere related to banking and making money with money - 

by Aivars Jurcans

Buying, Selling, Merging

Brookfield Asset Management has agreed to buy a 62% stake in Oaktree Capital Group in a cash-and-stock deal valued at about USD 4.8 billion, an 11.8% premium over the Oaktree’s closing share price. The combined entity will have USD 475 billion of assets under management (Blackstone had USD 472 billion at the end of 2018) and is expected to generate USD 2.5 billion in fee-related revenues.

Source: Reuters, Bloomberg, Financial Times

Lufax, an online wealth management business of Ping An, has completed another round of fund raising that valued it at USD 39.4 billion, with Qatar Investment Authority a major investor.

Source: Financial Times

Raisin, a pan-European fintech marketplace for savings and investment products, has acquired MHB Bank, a Frankfurt-based lender and Raisin’s main provider of banking services in Germany. The terms and conditions of transaction were not disclosed; the deal is still subject to regulatory approval. Raisin claims having 165,000 customers who can choose from more than 250 products offered by nearly 70 European banks. 

Source: techcrunch.com

Deal Ideas In Process

Naspers, a Cape Town based investment group and shareholder in Tencent, is said to be in talks to inject about USD 200 million in Capital Float, a business loan provider, and Wimbo, a payments security firm. It’s planned investment in India this year is said to reach USD 1 billion.

Source: Bloomberg

Jumia, an African e-commerce company and one of Africa’s 3 unicorns, has filed for a New York IPO which could value the firm at USD 1.6 billion or more. Established in 2012, Jumia provides online shopping, logistics and payment services in 14 African countries and claims having 4 million customers.

Source: Reuters, Bloomberg

Edmond de Rothschild Group is said to be in process of consolidating all its operations under the Swiss bank and delisting it from the Zurich stock exchange.

Source: Financial Times

Raiffeisen Bank, an Austrian lender with EUR 2.5 billion of assets (1.8% of total) in Serbia, has not ruled out that it may have interest to participate in privatisation of Komercijalna Banka, Serbia’s 2nd largest lender. 

Source: Reuters

OneSavings, a UK FTSE 250 bank, is said to be in negotiations to take over Charter Court, a rival, in an all-share deal with at no premium to Charter Court’s share price. The combined group would have a market capitalisation of about GBP 1.6 billion and will continue as a specialist lend focusing on buy-to-let mortgages. 

Source: Financial Times, Reuters

Entirely German Story

Deutsche Bank estimates that changes in ECB monetary policy and increase in rates by 100 basis points would raise its net interest income by EUR 1.7 billion in the first year, while Commerzbank expects a EUR 500-550 million boost.

Source: Financial Times

Thanks, But No Deal

Intesa Sanpaolo, Italy’s biggest retail bank, is not interested in any merger deal – either domestic or abroad, according to Carlo Messina, its CEO.

Source: Reuters

Advent, a US private equity fund, has decided not to proceed “for the moment” with its takeover bid for Italian credit data provided Cerved. The deal was expected to value Cerved at about EUR 1.8 billion.

Source: Reuters

Mastercard has confirmed that its offer window to buy Earthport Plc, a payments firm, has lapsed clearing the way for Visa to make a bid. Mastercard also admitted having secured valid acceptance from only 0.29% of shareholders of Earthport.

Source: Reuters

Valued By Markets

Euro Stoxx banks index, in terms of book value, has not been above 1.0x since 2007 and its 2019 estimate is 0.6x. In comparison, the US KBW banks index trades at 1.19x times estimated 2019 book value and has been above 1.0x since 2013.

Source: Financial Times

Ping An, a China financial group, is said to be trading at 13x times its forward earnings (the lowest multiple among its peer group) while its return on equity at 18.9% stand at more than double than some of its competitors.

Source: Financial Times

Rothschild & Co, a family-owned bank, reports that it has advised clients on almost 400 completed M&A transactions with a total value of USD 380 billion in 2018 and that its M&A advisory fees have grown 17%, to EUR 941 million, year-on-year.

Source: Financial Times

Mizuho, one of the 3 Japan’s mega-banks (along with Mitsubishi UFJ and Sumitomo Mitsui), reported net profits of just USD 720 million. For a bank with assets of USD 1.8 trillion this translates into a return on assets of 0.04% (compared to ROA of close to 1% achieved by the US banks of similar size).

Source: Financial Times

Planning, Investing, Moving

Goldman Sachs is said to be considering opening up its “special-situations” group to third party investors.

Source: Financial Times

Lloyds, RBS and Barclays have launched jointly run mini-branches for business customers in 6 locations on a trial basis.  The “hubs” will have longer opening hours and will allow businesses to pay  in money and cheques and exchange cash.

Source: Financial Times

Nationwide, a UK building society, has invested GBP 15 million in 10x Future Technologies, a developer of core banking platforms used by lenders. Among other investors who participated in the latest GBP 32 million funding round are Ping An and Oliver Wyman. 

Source: Financial Times

Up-And-Comers

Lendy, a UK Portsmouth-based peer-to-peer lender, has been put on FCA’s (the regulator) watchlist because of the concerns about its business model, leadership and financial position. Some 55% of its outstanding loans are said to be considered non-performing, with further 10% being past due but not yet in default.

Source: Financial Times

Important Numbers

The number of bankers in Europe earning more than EUR 1 million a year rose 6% to 4,859 in 2017, according to data from the European Banking Authority, of which 3,567 were UK-based.

Source: Financial Times

Italy has reduced its total bad debts at the end of January 2019 by 32.5%, compared to year ago, to EUR 100 billion.

Source: Financial Times

The number of bank branches per million people in the UK has fallen 37% from its peak, according to a report by McKinsey, while Netherlands has seen a 71% drop.

Source: Financial Times

A Thought Worth Noting

“If politicians do dumb things that lower trend growth, then there is nothing central banks can do. All they can do is ease the pain a little.”

Erik Nielsen, chief economist, UniCredit

See you again next week!

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Aivars Jurcans has more than 20 years of corporate finance and investment banking experience. His services are currently available through MURINUS ADVISERS (www.murinusadvisers.com).

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