Corporate Financier’s Notes
by Aivars Jurcans
Done! And Done
Allianz, a German insurer, has acquired a stake of about 4% in Taikang Life, a Beijing-based insurer, from Goldman Sachs for about USD 1 billion.
UniCredit has agreed to sell the riskier notes in a securitisation issue backed by non-performing house mortgages with a gross book value of EUR 4.1 billion.
Wirecard, a German payment services company, has agreed to acquire AllScore Payment Services, a Beijing-based company. Under the deal Wirecard will buy 80% of shares for as much as EUR 72.4 million and have an option to buy the rest after 2 years for EUR 20.2 million. Wirecard expects AllScore to generate more than EUR 35 million in ebitda in 2021 and more than EUR 50 million in 2022.
Westpac, the 2nd largest Australian bank by market capitalisation, has raised USD 1.38 billion to strengthen its capital and to compensate for weaker performance this year. The bank reported a CET1 ratio of 10.7%, just above the regulatory requirement of at least 10.5% for Australia’s 4 big banks.
Source: FT, Reuters
First Horizon National and IBERIABANK have agreed to merge creating one of the largest banks in the southeast of the US. The combined bank, called First Horizon, will have around USD 75 billion in assets, presence in 11 states and market capitalisation of more than USD 9 billion.
Deals On The Table
Swiss Re and China Pacific Insurance are said to be exploring a possible partnership, where China Pacific may invest at least USD 2 billion for a stake in Swiss Re while the latter would spend USD 500 million to USD 1 billion for a minority stake in China Pacific.
Source: Bloomberg, Reuters
Postal Savings Bank of China, the 5th largest commercial lender in the country by deposits, is said to be seeking to raise as much as USD 4.7 billion in a secondary share offering in Shanghai. The new funds will be used to boost the bank’s capital and are not earmarked for any particular project. PSBC had a total of 39,700 branches at the end of June, 48% of which are located in rural counties and villages.
Source: FT, Reuters
China’s government is said to be seeking investors to buy all or part of its 98% stake in Dajia Insurance (translates as “Everybody’s Insurance”), a group formerly known as Anbang which got taken over by the state in 2017.
Banco BPI, a Portuguese lender owned by Spain’s Caixabank, is said to be aiming to reduce its 48.1% stake in BFA, an Angola’s leading bank, but “is in no rush to sell”. Reducing BPI’s exposure to Angola’s economy has been recommended by the European Central Bank.
Advisor Group is said to be in exclusive negotiations to acquire Ladenburg Thalmann Financial Services, a rival broker-dealer with a market value of about USD 361 million.
XP, a Brazilian financial services firm, is said to be planning to list its shares on Nasdaq in an IPO. XP expects to increase its assets under custody to USD 251 billion by December 2020.
Yes Bank, one of India’s largest private lenders, is said to have received a USD 1.2 billion binding offer from an unnamed foreign investor to take a stake in the bank through newly issued equity, “subject to approval by the board, shareholders and regulators”.
Thanks, But No Deal
Credito Fondiario, majority-owned by Elliott Management (a US investment fund), is said to have ended talks with Banca IFIS, a Venice-based lender controlled by the von Furstenberg family, about folding IFIS’ debt purchase and recovery business into a new unit that would become part of Credito Fondario. The stumbling block is said to be IFIS’ request to retain some operational control despite having a minority stake in the new entity.
Skin In The Game
Ana Botin, the chairman of Banco Santander, has bought one million shares in the bank. This purchase brings Botin’s stake up to 0.142% from 0.139%.
Metrics To Watch
Societe Generale’s, a French bank, CET1 ratio increased to 12.5% in Q3 vs 12.0% in Q2. SocGen’s shares are trading at 0.4x times book value.
Danske Bank, a Danish lender, has warned that its investments in digitalisation and anti-money laundering controls would depress its return on equity in 2020 to 5%-6%, a significant decrease compared with 13.6% recorded in 2017.
Sberbank’s, Russia’s state-owned lender, return on equity fell from 24.5% to 22.4% year-on-year at the end of Q3.
BNP Paribas’, a French bank, common equity tier one ratio was at 12% at the end of Q3, an increase of 10 bps over the previous quarter.
Deutsche Bank publicly conceded that meeting its 2022 targets of 12% return on tangible equity is a ”steep hill to climb” after reporting ROTE of 1.9% in Q3.
Follow The Money
Banco Santander, a Spanish lender, has acquired a 50.1% stake in Ebury, a London-based fintech, which provides foreign exchange, cash management, trade finance and other services to small and medium-sized businesses. The transaction value was GBP 350 million. Santander expects its investment to provide a return on invested capital of above 25% in 2024.
Source: FT, WSJ, Reuters
EQT’s, a Swedish buyout group, 6th fund has generated returns of 2.4x times the money invested. The latest fund has so far delivered a 1.1x times return and is “on plan” to deliver a return of between 2.0x and 2.5x times.
A Thought Worth Noting
“The need to deepen and complete European banking union is undeniable. After years of discussion, the deadlock has to end.”
Olaf Scholz, Germany’s finance minister
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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 Joe Taylor on Unsplash