Corporate Financier’s Notes
by Aivars Jurcans
Done! And Done
Visa, the payments company, has agreed to acquire Plaid, a provider of so-called “aggregator” software that connects fintech companies with their customers’ bank information, for USD 5.3 billion. Less than 2 years ago in a fundraising round Plaid was valued at USD 2.65 billion. The purchase price Visa is about to pay amounts to 21x times Plaid’s expected sales in 2021.
Deals On The Table
Russia is said to be considering a secondary public offering of shares in VTB Bank.
JPMorgan Chase is said to be seeking 100% ownership in China International Fund Management, its JV with Shanghai International Trust. China International Fund Management oversees USD 22 billion of assets.
China’s Fosun International is said to be considering reducing its stakes or even divest completely from 2 financial firms it controls in Brazil – Guide Investimentos, a broker, and Rio Bravo, an asset manager. Guide’s last valuation is said to be around USD 145 million.
Bank Audi, a Lebanese lender, is said to have received “several expressions of interest” to buy its Egyptian unit. Bank Audi operates about 50 branches in Egypt and 88 outlets in Lebanon.
Fosun International is said to be exploring options, including a potential sale, for Frankfurter Leben Holding, its German insurance business. Frankfurter Leben, a specialised consolidator of life-insurance portfolios, managed about EUR 9.3 billion in investments and reported net income of EUR 13.4 million at the end of 2018.
Driver Management Company, an activist investor targeting US banks, is proposing to Community Bankers Trust Corp, the holding company for Essex Bank (a Virginia community bank), to sell itself. Community Bankers has a market capitalisation of about USD 200 million.
Beltone Financial Holding, an Egyptian investment bank controlled by Naguib Sawiris (an Egyptian billionaire), is said to be planning to sell its 60% stake in Auerbach Grayson & Company, a New York-based brokerage, in 2020.
HSBC is said to have kicked off the sale of its French retail operations (about 230 branches). The parties approached to gauge potential interest include French banks La Banque Postale, Credit Agricole, Credit Mutuel, Milleis Banque and BNP Paribas as well as the private equity buyers Apollo and Cerberus.
Voya Financial, a US retirement and insurance plan provider, is said to be exploring a sale that could value it at USD 10 billion or more. AIG, an insurer, Principal Financial Group, an asset manager, and Prudential Financial, a life insurance and retirement plan provider, are mentioned as potentially interested parties Voya has held talks with.
Metrics To Watch
Goldman Sachs reported return on equity of 10% for 2019, as forecasted. The USD 700 million spent on its consumer businesses like Apple Card, Marcus and the like are estimated to have created a 70 bps drag on RoE.
Citigroup’s return on tangible common equity for 2019 was 12.1%, above the bank’s target of 12%. Citi expects to hit its 2020 ROTCE target of 13,5%.
JPMorgan’s shares are traded at more than 2x times the tangible book value. UBS analysts call this a “substantial share outperformance” meaning that there is no longer “sufficient upside” to the stock.
ABN Amro’s, a Dutch lender (56% owned by the government), shares are traded at 0.7x times its tangible book value.
Follow The Money
Aareal Bank, a German real estate lender, is said to be open to selling Aareon, its software business, “in the medium term”.
First Abu Dhabi Bank, a Dubai lender, has started an auction process for a Dubai hotel operated by Shangri-La and owned by Al Jaber, an indebted construction group. The starting price is said to be USD 190.59 million.
On The Baltic Shores
By the end of 2019, Bank of Lithuania had issued e-money licenses to 64 fintechs with about 40 more applications under examination. This places Lithuania behind the UK with more than 150 regulated fintechs but ahead of all other EU countries, none of which has more than 20.
The S&P financial sector trades at around 13x times expected earnings over the next 12 months, versus less than 11x times a year earlier.
A Thought Worth Noting
“In security terms, fintech is a challenge as well. It should be taken really seriously.”
Linas Linkevicius, foreign minister, Lithuania
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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.