Corporate Financier’s Notes
by Aivars Jurcans
Done! And Done
Helvetia, a Swiss insurer, has agreed to buy up to 70% of Caser, a Spanish insurer, from Spanish banks (Bankia, Liberbank and Ibercaja) and from Covea (a French insurer) for EUR 780 million. The deal values Caser (which generated revenues of EUR 1.639 billion in 2018) at EUR 1.1 billion in total.
Deals On The Table
Banque Internationale Arabe de Tunisie, Tunisia’s biggest lender by market value, is said to be seeking to complete its acquisition “of more than 50% stake” in Tunisie Valeurs, the country’s biggest brokerage with a 19% share of the market. The deal is valued at about USD 26 million.
Mediolanum, an Italian asset manager, has announced that its 3.3% stake in Mediobanca was no longer strategic given the uncertainty over the lender’s future governance. The reclassification is supposed to make it easier for Mediolanum to sell its stake, although no such intention has been confirmed by the asset manager.
Amigo, a UK subprime lender, is said to have put itself up for sale. James Benamor, its founding shareholder, controls 61% of shares after the company was floated in 2018.
Axa, a French insurer, is said to be considering options for its Middle Eastern operations, including a potential sale. The operations fall under Axa’s International division which generated gross written premiums of EUR 3.45 billion and net income of EUR 232 million in H1 2019 (about 10% of the group’s overall total).
J.C.Flowers, a US investment and financial services focused private equity firm, is aid to be considering various exit options (including a potential sale) of Financiere CEP, its French loan insurance broker. A sale could value the company at about EUR 1.3 billion. J.C.Flowers acquired Financiere CEP in 2011 from PAI Partners for EUR 842 million.
Metrics To Watch
Goldman Sachs has pledged to increase its return on tangible equity to more than 14% by 2022. This has to be compared with 10.6% reported in 2019 and the average of 9.9% over the last decade.
JPMorgan Chase has a medium-term goal of a return on tangible equity of about 17%, while Morgan Stanley’s is set in the 13-15% range for 2020 and 2021, with 15-17% over the longer term.
Goldman Sachs’s investment banking produced return on equity of 18% in 2019, asset management – of 14%, trading – of 7%, and consumer business – of 3%.
Santander’s, a Spanish bank, common equity tier one ratio was 11.65% at the end of 2019, compared to 11.3% in Q3 2019. The bank expects to hit the top end of its medium-term target of 11-12% by the end of 2020.
Wells Fargo, a US bank, currently trades at 1.2x times book value.
Westpac, an Australian lender, reported return on equity of 10% in the year to September 2019; its shares are traded at a valuation of 1.3x times book.
Follow The Money
A group of investors led by SoftBank, will invest USD 125 million in AlphaCredit, a Latin American financial technology platform which provides credit lines to individuals and small companies that are underserved by traditional banks. AlphaCredit has lent more than USD 1 billion to clients in Mexico and Colombia.
WEX, a fintech payments processor, has agreed to acquire payments services providers eNett and Optal for about USD 1.7 billion (USD 1.28 billion in cash and about 2 million common shares in WEX).
“Ninja loans” – loans issued to people with no income, no jobs and no assets.
Germany has over 1,500 banks, followed by more than 500 in Italy, 400 in France and 200 in Spain.
According to Chainalysis, illicit activity accounts for only 1% of all Bitcoin transactions.
European banks’ average return on equity is around 6%, almost 1/2 that of US peers.
According to the European Central Bank, at the end of September, the non-performing loans at the main eurozone banks amounted to EUR 543 billion (down from over EUR 1 trillion 5 years ago), representing on average 3.4% of the sector’s loan book.
A Thought Worth Noting
“It seems in many [eurozone] countries the pros of negative rates don’t outweigh the cons. People are not taking out more loans and savers are understandably getting more worried about how they’re going to plan for the future.”
Ana Botin, executive chairman, Santander
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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