Corporate Financier’s Notes
by Aivars Jurcans
Done! And Done
Sun Life Financial, a Canadian insurer, has agreed to buy an 80% stake in InfraRed Capital Partners, a USD 12 billion London-based infrastructure and real estate investment manager, to expand its asset management unit. The terms of the deal include a closing payment of GBP 300 million which translates into a multiple of 17.4x times InfraRed’s operating profit in 2018, or 4.1% of its assets under management.
Source: Reuters, FT
Resolution Life, a vehicle established by Clive Cowdery, has acquired a book of life insurance policies from Voya Financial, for USD 1.25 billion.
New York Life Insurance, one of the largest insurers in the US (founded in 1845), has agreed to acquire a Cigna unit that sells employers non-medical insurance products for USD 6.3 billion. New York Life is one of the best-capitalised life insurers in the US with “surplus” (the insurance industry equivalent of net worth) of USD 25 billion at the end of 2018.
Source: FT, WSJ
JPMorgan Chase has received approval from the China Securities Regulatory Commission to launch a majority-owned Chinese securities business. JPMorgan has become the first US bank to be granted such approval.
Dubai Islamic Bank, a United Arab Emirates sharia-compliant bank, has received shareholder approval for the acquisition of Noor Bank, a Dubai-based unlisted bank. The transaction would create one of the largest Islamic banks in the world with total assets of USD 74.9 billion.
FS Investments, a Philadelphia-based credit investment firm with over USD 24 billion in assets under management, has agreed to acquire Chiron Investment Management, a money manager with USD 1.8 billion in assets under management. The terms of the deal were not disclosed.
Royal Bank of Canada, the country’s largest lender by assets, has agreed to sell all of its banking operations in the Eastern Caribbean to a consortium of 5 financial firms that includes Saint Lucia’s 1st National Bank and Antigua Commercial Bank. The terms of the deal were not disclosed.
Nomura Holdings has agreed to acquire Greentech Capital Advisors, a boutique investment bank. Established in 2009, Greentech specialises in sustainable investing. The details of the transaction were not disclosed.
Bangkok Bank, Thailand’s 3rd largest lender, has agreed to acquire an 89.1% stake in PT Bank Permata, an Indonesian lender backed by Standard Chartered, for about USD 2.7 billion. Permata is the 12th largest bank in Indonesia by total assets and had USD 7.6 billion in loans and USD 8.5 billion in deposits at the end of September 2019. The transaction values Permata at 1.77x times its book value.
Source: Reuters, FT
Deals On The Table
PKO, Poland’s biggest bank, a consortium of Polish insurer PZU and its subsidiary Bank Pekao, as well as Austria’s Erste Bank and French Credit Agricole are expected to make first-round offers for the Commerzbank’s 69.3% stake in mBank, Polands 4th largest lender by assets, in mid-January 2020. Bids from further contenders are not to be ruled out.
Thanks, But No Deal
National Commercial Bank, Saudi’s biggest lender, is said to have scrapped plans to merge with a local rival, Riyad Bank, and to create a lender with USD 200 billion in assets because of disagreement on valuation.
Metrics To Watch
Credit Agricole’s, a French bank, investment banking and capital markets division generated a return on equity of 12% with a cost-to-income ratio of 57% in Q3 2019 (compared with a 1.8% ROE and 88% cost-to-income ratio at Deutsche Bank).
UBS global wealth management unit’s reported net profit margin is 21%, compared with Julius Baer’s 27%.
Follow The Money
Saxo Bank, a Danish lender known for its trading platforms, and Zhejiang Geely, its Chinese owner (52% of shares), have agreed to set up a 50-50 JV to sell Saxo’s technology to Chinese banks and fintechs.
Ant Financial Services, an affiliate of Alibaba Group Holding, and The Vanguard Group, a US asset manager with more than USD 5 trillion in assets under management, have established a JV to provide retail investment advisory services in China. The service will accept minimum investments of USD 113.65 and will be accessible through Alipay app.
Ichigo Asset Management, a Japanese asset manager, is said to be planning to take a nearly 50% stake in Japan Display, a supplier to Apple, by investing USD 740 million to USD 830 million.
Wefox, a Berlin-based insurtech, has raised USD 110 million in a funding round that values the company at USD 1.65 billion. Wefox claims to have more than 500,000 customers.
On The Baltic Shores
In response to a proposal from the Bank of Lithuania, the European Central Bank has granted a special bank license to AB Fjord Bank, a Norwegian-owned lender, “to offer e-banking services, accept resident deposits and provide consumer credits”.
Citadele Bank, a Latvian lender controlled by a group of US investors led by Ripplewood Advisors, has agreed to acquire UniCredit Leasing operations in the Baltics. UniCredit’s leasing portfolio is said to amount to more than EUR 850 million. The transaction details were not disclosed.
Source: delfi.lv, citadele.lv
The Bank of England has doubled the size of the “countercyclical buffer” or rainy-day fund requirement for banks from 1% of risk-weighted assets to 2%. This is expected to allow banks to absorb GBP 23 billion of losses without cutting back on lending.
A Thought Worth Noting
“What people in London, New York and Silicon Valley don’t understand is that Asia is now setting the pace in financial services innovation.”
James Lloyd, partner, EY Asia-Pacific
Happy Holidays and warm wishes for 2020!
P.S. Please be advised that the next issue of Banking M&A Digest will be released on 9 January 2020.
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