Banking M&A Digest #36 (8.8.2019)

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My weekly notes on banking and financial services - 

by Aivars Jurcans

Done! And Done

Blackstone, a New York-based group, has agreed to buy a stake of between 10% and 15% in BC Capital Partners, another PE group, for about EUR 500 million.

Source: Financial Times, Bloomberg

Mastercard has agreed to acquire the real-time payments unit of Nets Group from Denmark for USD 3.2 billion.

Source: Financial Times, Reuters

Softbank Group has acquired a 8.1% stake in Banco Inter, a Brazilian online lender, through a share offering.

Source: Reuters

JPMorgan has won the auction to purchase a 2% equity stake in China International Fund Management from Shanghai International Trust and will thus increase its stake to 51%. The minimum bid price was said to be set at USD 34.2 million, a 33% premium to a net asset valuation performed by a third party.

Source: Financial Times

ReAssure, the UK’s 6th largest life insurer, has agreed to buy Quilter Life Assurance for GBP 425 million. Quilter Life Assurance manages pensions, investments, savings and protection products and had GBP 12.3 billion in assets at the end of June 2019.

Source: Financial Times

KKR has agreed to buy Heidelpay, a German payments group, for more than EUR 600 million. Heidelpay enables its clients to accept online and mobile payments and expects to generate EUR 40.5 million in ebitda in 2019.

Source: Financial Times

Eurovita, an Italian life insurer owned by Cinven ( a PE firm), has acquired Pramerica Life, its rival, from Prudential Financial. No financial details were disclosed but the deal is expected to boost Eurovita’s gross written premiums to EUR 2 billion.

Source: Reuters

Deals on the Table

CNP Assurances, a French insurer, and Cattolica Assicurazioni, an Italian insurer, are said to be among the European bidders looking to submit binding offers for a controlling stake (60%-70%) in the insurance arm of UBI Banca, an Italian lender. The deal is expected to value the entire business at about EUR 1 billion.

Source: Reuters

Banca IFIS, an Italian lender, is said to be in exclusive talks to sell some of its operations to Credito Fondiario, its rival. Under the deal IFIS is expected to fold its bad loan collection and purchasing businesses into a new entity which would then become part of Credito Fondiario, with IFIS keeping a minority stake.

Source: Reuters

Aviva, a British insurer, is said to be working on a possible sale of its Asian business. The formal process is expected to begin in Q4 2019 and might net around GBP 1.5 – 2 billion.

Source: Reuters

Thanks, But No Deal

FinecoBank, an Italian online broker formerly owned by UniCredit, has denied having any interest to participate in the expected wave of mergers in the asset management industry, either as predator or prey.

Source: Reuters

Metrics to Watch

UniCredit’s common equity tier 1 ratio slipped to 12.08% from 12.25% at the end of Q1 2019.

Source: Financial Times

HSBC aims at return on tangible equity of above 11% in 2020.

Source: Financial Times

RBS said it was unlikely to reach its 2020 aim of having a return on tangible equity of 12% and reducing its cost-to-income ratio to below 50% (7.5% and 57.2% at the end of June 2019).

Source: Financial Times

Credit Agricole’s core equity tier one ratio came in at 11.6%, 10 bps above the Q1 and above its 11% target. Its return on tangible equity was 11%.

Source: Financial Times

Natixis, a French bank, core equity tier 1 ratio was 11.5% at the end of June, above its 2020 target of 11%.

Source: Financial Times

Societe Generale expects its core equity tier 1 ratio to come in between 12.4% and 12.8% by the end of 2020, above the expectations of 12.2%.

Source: Financial Times

Barclays posted a return of tangible equity of 9% in Q2 2019, below the expected 9.3%.

Source: Financial Times

Standard Chartered common equity tier 1 ratio fell to 13.5% in Q2 2019 compared with a consensus forecast of 13.8%.

Source: Financial Times

Strategic Cuts

HSBC intends to reduce its wage costs by up to 4%. Its severance costs this year would be USD 650-700 million, saving it around the same amount annually going forward.

Source: WSJ

On the Baltic Shores

Klarna, a Swedish payments company, has raised USD 460 million in the latest funding round which brings the post-money valuation of the company to USD 5.5 billion. Founded in 2005, Klarna has become the most valuable European and the 8th most valuable private fintech globally.

Source: Financial Times

Exciting Numbers

Infrastructure funds have a lower cost of capital and are willing to buy at 12x to 15x times earnings (compared with 10x to 12x times by private equity) and are willing to hold assets for up to 10 years (compared with 5 years targeted by PE).

Source: Financial Times

Family offices are estimated to control almost USD 6 trillion in assets.

Source: Financial Times

According to government data, more than USD 200 billion in commercial acceptance bills (or I.O.U.s.) are floating around the Chinese financial system.

Source: NYT

A Thought Worth Noting

“I don’t see any credit demand in Europe unanswered, so there’s no need for further liquidity to be injected. I actually see that the negative rate environment is making consumers so uncertain about their financial environment that they’re starting to save more rather than less.”

Ralf Hamers, CEO, ING


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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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