Corporate Financier’s Notes
by Aivars Jurcans
Done! And Done
Almex, a controlling shareholder in Halyk Bank, the Kazakhstan’s biggest lender, has sold USD 278 million of shares on the LSE through global depositary receipts. Almex, owned by Dinara and Timur Kulibayev (daughter and son-in-law of Nursultan Nazarbayev, the country’s ex-president) still retains a 64.7% stake in the bank. Halyk Bank has a 37% share of Kazakhstan’s banking market.
Tokio Marine, Japan’s largest non-life insurance group, has agreed to acquire Pure Group, a US high-net-worth insurer majority owned by KKR and Stone Point, for USD 3.1 billion. Pure, established in 2006, had USD 1 billion in managed premiums in 2018. Pure covers almost 90,000 high net worth families and insures homes that are generally valued at USD 1 million or more.
Source: FT, Bloomberg
Deals On the Table
Afreximbank, a supranational lender owned by a number of African governments and central banks, is said to be planning a float on LSE. The bank has USD 15 billion in loans (trade finance primarily). Its historic return on equity is around 10%. The bank may be seeking a valuation close to its book value of USD 2.7 billion.
Helaba, a Frankfurt-based lender, and Deka, an asset manager, have said to start talks to examine closer cooperation, up to and including a merger. The combined entity would have EUR 260 billion in assets and 11,000 staff. Deka is entirely controlled by Germany’s 385 local savings banks, while the regional governments of Hesse and Thuringia hold a 12% stake in Helaba.
Source: FT, Reuters
The IPO of BMG, a Brazilian lender, is expected to raise up to USD 395 million if shares are sold at the top of the pricing range.
Eurobank, a Greek lender, is said to be struggling to finalise a deal to sell an 80% stake in Financial Planning Services, its loan-recovery unit, to PIMCO, a US money manager. The sellers are said to value FPS at about EUR 300 million and have not been able to bridge a valuation gap with PIMCO yet.
Italy is said to be in talks with the European Commission over a plan to rid state-owned Monte dei Paschi di Siena of its soured loans to pave the way for a sale of the bank. Monte dei Paschi had EUR 16 billion of soured loans (or 16% of total loans) at the end of June, whereas the current market benchmark for lenders seeking mergers is about 5%.
Thanks, But No Deal
Kaspi.kz, a Kazakh fintech group (part-owned by Goldman Sachs and Baring Vostok) that offers online payments and an ecommerce marketplace via an app, has postponed its London flotation “in light of currently unfavourable and uncertain market conditions”. It was expecting being valued at USD 5 billion.
Follow the Money
Munich Re, a German reinsurer, has invested USD 250 million in Next Insurance, a provider of digital insurance products to small US businesses. Next Insurance has a valuation of over USD 1 billion.
Vista Equity Partners, a buyout firm, is said to be considering a potential sale of up to a 50% stake in Finastra, a London-based financial technology company with USD 1.9 billion in annual revenue. The deal could value Finastra at more than USD 10 billion (including debt of USD 6 billion).
HSBC is said to be weighing an aggressive round of cost-cutting in Europe where its cost-to-income ratio in H1 2019 was 99.9%. At group level the target is to reduce the ratio from being close to 60% to just over 50%. Its return on tangible equity in H1 2019 was above 11%.
Stripe, a US fintech, has got a USD 35 billion valuation in a funding round last month. Its listed rival, Adyen, has a market value of EUR 20 billion or 83x times expected earnings.
“Jaws” – the difference between a bank’s growth in revenues and expenses.
Japanese banks are the worst performing industry group on the Topix stock index over the past 4 years, now trading at 0.32x times book value on average.
Greek banks hold EUR 75 billion in impaired loans.
A Thought Worth Noting
“Why would I buy a small follower business in a small country that is fully consolidated?”
Oliver Bate, CEO, Allianz
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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.