Banking M&A Digest #24

My weekly summary notes on banking and financial services - 

by Aivars Jurcans

Done and Done

Liquidnet, a trading network that operates a stock exchange known as a “dark pool”, has acquired RSRCHXchange, a London-based online marketplace for investment research. Transaction details were not disclosed. 

Source: Financial Times

Goldman Sachs is said to have acquired USD 100 million claim against The International Bank Corporation, a Bahraini bank which defaulted 10 years ago, from Commerzbank.

Source: Reuters

SoftBank Vision Fund has agreed to invest USD 800 million in Greensill, a UK-based private supply-chain finance company. This investment has increased Greensill’s valuation to about USD 3.5 billion.

Source: Financial Times

Brewin Dolphin, a UK wealth manager, has agreed to acquire Investec’s Irish wealth management business (with EUR 2.9 billion in assets under management) in a transaction valued at EUR 44 million. With EUR 4.6 billion in assets under management Brewin will become one of the top 3 wealth managers in the country.

Source: Financial Times

Deals on the Table

UniCredit is said to have intensified preparations for a potential bid for Commerzbank by retaining Lazard and JPMorgan. The bank itself has issued a statement that no banking mandate had been signed in relation to any potential market operation.

Source: Reuters

Merger talks between Deutsche Bank’s asset manager DWS (EUR 704 billion of assets under management) and UBS asset management arm (EUR 733 billion) are said to have stalled because of valuation issues. Deutsche which owns 79% of DWS would like to continue fully consolidating the merged entity but, to do that, is required to keep at least 40% and to exert significant management control.

Source: Financial Times

Metro Bank, a UK lender, is said to be preparing for sale of more than GBP 1 billion of loans. Its common equity tier one ratio was 12.1% at the end of Q1, down from 13.1% as at the end of 2018 and barely above the self-imposed minimum of 12%. Analysts estimate that the sale of entire GBP 1.7 billion portfolio at face value could lift the ratio by as much as 3 percentage points.

Source: Financial Times

Goldman Sachs is said to be close to a deal to acquire United Capital Financial Partners, a wealth manager with USD 24 billion in assets under management. The deal value is estimated to be “around USD 750 million”.

Source: Financial Times

Thus Spoke the Markets

Mitsubishi UFJ Financial Group’s, a Japanese bank, common equity tier one capital ratio fell to over 11%. Its shares are trading at a historically low price-to-book ratio of 0.4x times.

Source: Financial Times

Credit Agricole’s, a French bank, core tier one ratio stood flat at 11.5% at the end of Q1 2019.

Source: Financial Times

Deutsche Bank’s retail and commercial banking division is aiming at increasing its return on tangible equity from 4.8% in 2018 to about 12% in 2021.

Source: Financial Times

Allianz, an insurer, reported Solvency II ratio of 218% at the end of Q1, well above its minimum target of 180% but 11 percentage points below the end of 2018 level.

Source: Financial Times

Bank Pekao, Poland’s 3rd biggest bank, has reduced its cost-to-income ratio from 46% a year ago to 44% in Q1 2019.

Source: Financial Times

UniCredit’s notional cost of equity is estimated to be 15%, a level that is high for a European bank. Its shares trade at only 1/2 of their tangible book value (compared with Intesa at 9/10).

Source: Financial Times

Where the Money Goes

Goldman Sachs prepares to launch its own high-tech version of global cash management business later this year and has applied for a banking license in Japan.

Source: Financial Times

Thanks, But No Deal

BlackRock, a US asset manager, has pulled out from the proposed rescue of Carige, an Italian bank (founded in 1483) under temporary administration. BlackRock was expected to buy around 1/2 of the EUR 720 million share issue.

Source: Reuters, Financial Times

New Tricks for Old Dogs

Unicredit has established a EUR 2 billion fund for long-term investment in small Italian companies.

Source: Financial Times

Up-and-Comers

Finablr, a United Arab Emirates-based payments and foreign exchange company, has significantly reduced its IPO price. The company now has an implied market value of about GBP 1.23 billion.

Source: Reuters

Financial Lingo

“Negative fees” – a new pricing structure introduced by Salt Low truBeta US Market exchange traded fund, whereby the fund will pay customers 5bps to invest in it (USD 5 for each USD 10,000 invested). This structure will be in force until the fund reaches USD 100 million (considered to be a crucial size for ETF to reach) in size. Historically, it has taken 6 years for an ETF on average to get to USD 100 million.

Source: Financial Times

Exciting Numbers

The deal in which Ion Group, a Dublin-based consolidator of financial data, has acquired a stake in Acuris, the parent of Mergermarket and Debtwire, values Acuris at about 20.0x times its trailing ebitda.

Source: Financial Times

According to Invest Europe, the value of dealmaking in Europe, excluding the UK, rose 13% to EUR 63.9 billion in 2018, while the UK saw a 12% fall to EUR 16.7 billion.

Source: Financial Times

A Thought Worth Noting

“But it is a golden rule that we don’t play with clients’ cash. If we ran a proprietary business, we could have multiplied our profits five times or more. But the clients’ money is sacrosanct.”

Lionel Aeschlimann, managing partner, Mirabaud (a Swiss private bank, est. 1819)

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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.

Photo by Daria Shevtsova on Unsplash