Corporate Financier’s Notes
by Aivars Jurcans
Done! And Done
Spaldy Investments, a British Virgin Islands-registered vehicle owned by Jaime Gilinski Bacal (one of Colombia’s richest men), has acquired a 4.3% stake in Metro Bank, a UK lender.
Deutsche Bank has sold USD 50 billion in unwanted assets to Goldman Sachs as part of its restructuring. The book which likely includes derivatives and emerging market debt is said to have been purchased by Goldman at “a deep discount”.
Source: Reuters, Bloomberg
Charles Schwab, a US discount broker, has agreed to acquire TD Ameritrade, its rival, in an all-stock deal valued at USD 26 billion. The combined company will have assets of around USD 5 trillion and USD 6 billion in reported annual profits. Toronto-Dominion Bank, Canada’s 2nd largest lender by assets, owns a 43% stake in Ameritrade.
Source: Reuters, Bloomberg, FT
American International Group, a US insurer, has agreed to sell a major portion of its stake in Fortitude Re, a reinsurer, to Carlyle, a buyout fund, and T&S Holdings, a Japanese insurer, for about USD 1.8 billion. The transaction will reduce AIG’s shareholding in Fortitude from about 80% to 3.5%.
Source: Reuters, WSJ
Chubb, an insurer, has agreed to buy up to an additional 22.4% stake in Huatai Insurance Group, a Chinese insurer. Chubb already holds a nearly 27% stake in Huatai.
The Dutch state has sold its last remaining shares in Saudi British Bank. It had acquired its stake in SABB with the nationalisation of the Dutch operations of Fortis, a Belgian bank, in 2008.
Deals On The Table
XP, Brazil’s largest brokerage, is seeking to raise about USD 1.5 billion on Nasdaq in an IPO in early December. The firm expects to achieve a market valuation of USD 12 billion to USD 15 billion, or a multiple of about 30x times projected earnings.
Assicurazioni Generali, an Italian insurer, is said to be preparing a formal bid for European assets of MetLife. A deal could be valued at about EUR 3 billion.
UniCredit, an Italian lender, is said to have agreed to sell its 50% stake in Koc Financial Services, a JV which controls Yapi Kredi (Turkey’s 3rd biggest bank with a market value of USD 3.7 billion), to its partner Koc Holding. Koc Financial Services owns almost 82% of Yapi Kredi. UniCredit has been invested in Yapi Kredi since 2002.
Bangkok Commercial Asset Management, a Thailand’s distressed debt management company, is said to be planning to raise USD 785 – USD 888 million in an IPO. The proceeds will be used to buy non-performing assets from banks, repay debt and refinance its maturing bonds.
Thanks, But No Deal
Home Credit, a Czech consumer lender controlled by Petr Kellner, is said to have dropped plans for Hong Kong listing because of failing to achieve its hoped-for valuation (estimated at between USD 8.3 billion and USD 10 billion). The company had intended to float 10% of its shares.
Metrics To Watch
Swiss Re, a reinsurer, return on capital for the business will be about 18% in 2019.
HSBC US operations and its “non-ring fenced bank” in Europe (with about USD 280 billion of assets adjusted for risk) have generated a return on tangible equity of about 1% in the first 9 months of 2019.
Follow The Money
Royal Bank of Scotland has opened Bo, its new digital bank, after almost 2 years of preparation and having spent about GBP 100 million on the project.
MetLife, a US insurer, has agreed to buy Bequest, a company providing help to draw up legally valid wills and estate planning documents online. The details of transaction were not disclosed.
PayPal, a payment processor, has agreed to acquire Honey Science Corp, a privately held shopping and rewards platform, for about USD 4 billion. Pay Pal and Venmo, its mobile payments service, have more than 275 million active consumer accounts.
Ant Financial, the Alibaba fintech arm, is said to be building a USD 1 billion investment fund to back start-ups across south-east Asia and India. Ant is said to have already invested in 160 start-ups over the last 5 years. It is currently being valued at around USD 150 billion.
According to the European Central Bank’s research, stock markets are much better source of finance for carbon-reducing technologies than credit markets. Shifting the world’s financial system towards 50% equity financing could cut carbon emissions by some 12%.
The state’s share in Polish banking assets amounts to 41%.
According to the European Banking Federation, the average return on equity of German banks in 2018 was 2.4%, the 2nd lowest in the EU and far below the average of 6.1%.
According to CoinMarketCap, a website, the market worth of the top 100 cryptocurrencies stands at USD 223 billion, with bitcoin accounting for more than 1/2 of it.
A Thought Worth Noting
“Personally I am very cautious – I would invest in the higher tiers of deals. We believe we are late in the credit cycle, and when you are late in the cycle, you should go up the credit ladder.”
Tracy Chen, portfolio manager, Brandywine Global Investment Management
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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.