Banking M&A Digest #26

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My weekly summary notes on banking and financial services - 

by Aivars Jurcans

Done! And Done

Morningstar, an Illinois-based investment research group, has agreed to acquire DBRS, Canada’s credit rating agency, in a transaction valued at USD 669 million. DBRS rates more than 2,400 issuer families and nearly 50,000 securities. It reported revenues of USD 167 million as at the end of fiscal year on 30 November 2018.

Source: Financial Times, Bloomberg

Global Payments, an Atlanta-based fintech, has agreed to acquire Total System Services, its Columbus-based rival engaged in credit card payments processing and credit card issuance, in an all-stock deal valued at USD 21.5 billion. The combined entity is expected to generate USD 3.5 billion in ebitda and USD 2.5 billion in free cash flow.

Source: Financial Times

SFM UK Management, a subsidiary of Soros Fund Management, has acquired a 3% stake in GAM, a Swiss asset manager. GAM’s enterprise value to forward ebitda multiple of 17 is above that of its main rivals, Ashmore or Man Group.

Source: Financial Times

SCOR, a French reinsurer, has agreed to acquire 100% of shares in Coriolis Capital, an asset manager specialised in insurance-linked securities. The terms of the deal were not disclosed.

Source: Reuters

Deals on the Table

Cassa Depositi e Prestiti, an Italian state lender, is said to be planning to raise its stake in SIA, a payment services group, to around 83% by acquiring stakes from other shareholders, including Intesa Sanpaolo (3.97%) and UniCredit (3.97%). CDP currently controls 49.5% of SIA with Poste Italiane and might have to spend up to EUR 200 million to reach 83%.

Source: Reuters

Thus Spoke the Markets

Bank of Nova Scotia, Canada’s 3rd largest lender by assets, reported a productivity ratio –  expenses as a percentage of revenue – of 51.8% in Q1, down from 54.9% 3 months before.

Source: Bloomberg

Where the Money Goes

BondMason, a UK property lender, will withdraw from its core peer-to-peer business because of “increased costs” including “regulatory, compliance and client acquisition costs”. BondMason was offering retail savers to invest in property-backed loans and aiming to provide annual returns to investors of around 6%.

Source: Financial Times

New Tricks for Old Dogs

Aviva, a 323-year old British insurer, might reverse its 2017 decision to merge its 2 main businesses and separate life and non-life insurance. Its central costs have grown to represent 10% of group operating earnings, which is high in a sector context.

Source: Financial Times

Up-and-Comers

Plaid, a US fintech (valued at USD 2.65 billion) which provides technology to other fintechs to link to customers’ bank accounts, has entered the UK market to take advantage of its open banking initiative.

Source: Financial Times

Nubank, a Brazilian fintech with 8.5 million customers, is planning to enter Mexican market and to launch its first product (a credit card, possibly) there this year. Nubank has raised USD 420 million in 7 rounds and is valued at more than USD 4 billion.

Source: Financial Times

Financial Lingo

“Mass affluent” – a term that describes individuals or households with between USD 500,000 and USD 10 million in investable assets.

Source: Financial Times

Exciting Numbers

According to China’s National Audit Office, some banks in central China had non-performing ratios of 40% at the end of 2018.

Source: Financial Times

A Thought Worth Noting

“It isn’t like you have to have a recession. It might be we’re in the last third [of the economic cycle]… – that third could be five more years.”

Jamie Dimon, CEO, JPMorgan Chase

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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

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