Banking M&A Digest #17

 

My weekly summary notes of banking and financial services news worldwide - 

by Aivars Jurcans

Buying, Selling, Merging

Centene, a US health insurer, has agreed to acquire WellCare Health Plans, its smaller rival, in a stock and cash transaction for USD 15.27 billion. Combined pro forma revenue is expected to amount to USD 97 billion, ebitda – to USD 5 billion and annual net cost savings by year 2 – to USD 500 million.

Source: Reuters, Bloomberg

Mastercard has agreed to take an up to 9.99% stake in Network International, a Middle Eastern payments group, at its upcoming IPO in London next month by making a USD 300 million investment. At that price the equity alone is valued at 17x times ebitda.

Source: Financial Times

Axa, the French insurer, has raised USD 1.5 billion from reducing its stake in Axa Equitable, its US life insurance business, from 60.1% to 48.3%. This transaction allows Axa to de-consolidate and hold its remaining investment in Axa Equitable in its books as an equity investment.

Source: Financial Times

HNA, a Chinese conglomerate, has reported a reduction of its holding in Deutsche Bank’s shares to 5.11%, of which only 0.19% remain in direct ownership while the rest are covered by derivatives that will gradually rewind. Thus, while HNA retains more than 5% of voting rights, its economic interest has been cut down to almost nil.

Source: Financial Times

BlackRock, the New York-based asset manager with USD 6 trillion under management, has agreed to acquire eFront, an analytics company for private equity, real estate and direct lending industries, from Bridgepoint, its private equity owner, in a transaction valued at USD 1.3 billion.

Source: Financial Times

Power Finance, an Indian lender to power projects, has agreed to acquire the federal government’s 52.63% stake in its peer REC for USD 2.1 billion in an all-cash transaction. This represents a discount of 3.7% to REC’s last traded price.

Source: Bloomberg

Deal Ideas In Process

Nexi, an Italian payments group, plans to list at an enterprise value of EUR 8.1 billion which translates into an EV-to-ebitda multiple of 17x.

Source: Financial Times

Tradeweb, a US fixed income and derivatives trading venue, expects to achieve a valuation of USD 5.8 billion in its forthcoming IPO.

Source: Financial Times

Abu Dhabi Financial Group, an alternative investment firm, is said to be in initial discussions about a possible merger with Shuaa Capital, a Dubai-listed investment bank.

Source: Reuters

Siam Commercial Bank, the Thailand’s second-largest bank by assets, is said to have entered into exclusive talks with FWD Group, a Hong Kong-based insurer, about the sale of its life insurance business, SCB Life Assurance.

Source: Reuters

When Deutsche Meets Commerzbank

Deutsche Bank has raised USD 34 billion in the past 9 years from investors to fund multiple restructurings. According to analyst estimates it may need further EUR 8 billion for a merger with Commerzbank.

Source: Bloomberg

Valued By Markets

DWS, the Deutsche Bank-owned asset manager with EUR 662 billion under management,  has generated 18% return on tangible equity in 2018. Its cost-to-income ratio of 72% remains significantly higher than that of its passive rivals (for instance, Amundi with 51.5%)

Source: Financial Times

Planning, Investing, Moving

China Investment Corporation (CIC), a China’s sovereign wealth fund, BNP Paribas, a French bank, and Eurazeo, a private equity group, have agreed to establish a EUR 1.0 – 1.5 billion fund to invest in European (primarily French) companies that expand into China. The fund will be managed by Eurazeo.

Source: Financial Times

Up-And-Comers

Nutmeg, a UK online wealth manager offering low cost investment portfolios, plans to raise up to GBP 10 million from its own customers in a crowdfunding campaign. The company has GBP 1.5 billion under management from 65,000 customers. With the average portfolio of GBP 23,000 Nutmeg is said to earn only GBP 100 in fees per year per customer, while its customer acquisition costs are estimated at between GBP 200 and GBP 500.

Source: Financial Times

Exciting Numbers

The UK pet insurance market is estimated at GBP 1.2 billion.

Source: Financial Times

DE Shaw, a hedge fund with USD 50 billion under management, currently employs about 1,300 people, which includes over 80 PhDs and 25 International math olympiad medal holders.

Source: Financial Times

The amount of government debt with negative yields has crossed the USD 10 trillion mark (compared to USD 5.7 trillion in early 2018).

Source: Financial Times

Thoughts Worth Noting

“When the marriage is going at its best is the point in time you are likely to begin a divorce because the current [private equity] investors have realised a return… when you’re performing the best, there’s enough story left that the next person will buy into that story and want to continue.”

Dave  North, CEO, Sedgwick

“Well, if the water is up to your neck, you should keep your chin up.”

Paul Achleitner, chairman, Deutsche Bank

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 .