Corporate Financier’s Notes
by Aivars Jurcans
Done! And Done
Apollo Global Management, a PE group, has agreed to pay USD 350 million in cash and about USD 1.2 billion in stock in a complex transaction that would eliminate its super-voting power in Athene Holding, an insurer. After the deal Apollo will own 35% in a single-class share structure compared with the current 17% of economic interest but 45% of votes.
Kenya’s competition authority has given permission to Access Bank, Nigeria’s biggest lender, to acquire 93.57% of Transnational Bank, a Kenyan lender focused on agricultural sector.
Leonardo del Vecchio, the 84-year old Italian billionaire, raised his shareholding in Mediobanca, an investment bank, from 6.94% to 7.5%, while another shareholder, Vincent Bollore, the French businessman, reduced his stake from 7.85% to 6.73%. Del Vecchio has now become the 2nd largest shareholder in Mediobanca after UniCredit (8.81%).
Banco BMG, a mid-sized Brazilian lender, and its shareholders raised USD 396 million in an IPO priced at the bottom of the previously announced range. BMG mainly offers credit card payroll loans through more than 600 outlets.
Rothschild & Co, an Anglo-French investment bank, has agreed to acquire Livingstone’s UK business, a partnership that provides dealmaking, debt and special situations advice. Terms of the deal were not disclosed.
Deals On the Table
Erste Group, an Austrian lender, is said to be potentially interested in buying mBank, a Commerzbank’s Polish unit, but only without its Swiss franc portfolio.
Banco Santander’s Polish unit is said to be prepared to evaluate the opportunity to acquire mBank.
China Minsheng Investment Group, a conglomerate founded in 2014 by 59 private companies, is said to be considering selling its 96% stake in Sirius International Insurance Group, a Bermuda-based global property-and-casualty insurer. Sirius collected USD 1.46 billion in premiums and other revenue in 2018. Minsheng acquired its stake in Sirius in 2016 for USD 2.6 billion.
UTI Asset Management, an Indian asset manager, is said to be preparing for an IPO in Mumbai to raise about USD 366 million. T.Rowe Price Group holds 26% of shares in UTI. Existing shareholders may be willing to sell a combined 30% stake in the offering.
Postal Savings Bank of China, one of the largest state-owned lenders, has received regulatory approval for an IPO to raise more than USD 3.3 billion in the mainland. Postal Bank has more than 40,000 outlets nationwide and over 550 million retail customers.
Thanks, But No Deal
African Export-Import Bank, a Cairo-based pan-continental trade finance provider, postponed its plans to raise USD 250 million through a London flotation because of “unfavourable market conditions”.
Source: Bloomberg, FT
Metrics To Watch
Standard Chartered’s common equity tier one capital ratio dropped by 1 percentage point in Q3. Its return on tangible equity of 8.6% this year is in line with some of the competitors, while StanChart’s share price to tangible book ratio of 0.5x times leaves it at a deep discount. The bank has reaffirmed its target ROTE of at least 10% in 2021.
Deutsche Bank’s core tier one equity ratio in Q3 remained unchanged compared to Q2 at 13.4%.
Banco Santander’s common equity tier one ratio at the end of Q3 was 11.3%, higher than a year ago but still below many of its peers.
Nomura’s shares are trading at a price to book ratio of 0.6x times, a premium of more than 20% to regional peers such as Mizuho and Sumitomo Mitsui.
HSBC posted return on tangible equity of 6.4% in Q3 (vs 10.9% a year ago). It intends to keep its core equity tier one capital ratio at above 14%.
Barclays, a UK investment bank, posted return on tangible equity of 10.2% (excluding charges and litigation expenses) at the end of September and is said to be “on track” to achieve its target ROTE of more than 9% in 2019. Its common equity tier one capital ratio stands at above 13%.
Follow the Money
A group of lenders led by Deutsche Bank sold a USD 425 million loan to the buyout of type-font designer Monotype Imaging. The loan is said to have been fully syndicated at a discount of 94 cents on the dollar. Similarly rated first-lien loans have cleared the market at an average price of 98.32 so far this month.
Sberbank, Russia’s state-owned lender, has agreed to buy Gazprombank’s, another Russian state-owned financial group, stake in Mail.ru, an internet company. Under the deal Sberbank will buy a 35% stake in MF Technologies, which owns 58.9% of Mail.ru’s voting rights.
Raisin’s, a German fintech that acts as saving and investment platform, value (based on recent funding rounds) is estimated to be at least EUR 500 million. Its customer base stands at about 220,000 and increases by about 10,000 a month.
According to Dealogic, of the 18 announced deals involving European investment companies in 2019, the average size was USD 121 million, down from USD 465 million in 2018 and USD 367 million in 2017.
A Thought Worth Noting
“There is a limit how far and how deep you go into negative territory. There is a bottom to everything, but we are not at that bottom at this point in time.”
Christine Lagarde, president, European Central Bank
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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.