Corporate Financier’s Notes
by Aivars Jurcans
Done! And Done
Abanca, a Spanish lender, has agreed to buy 95% of shares in EuroBic, a Portuguese bank. The price of the deal were not disclosed. At the end of December 2019, EuroBic reported loans of around EUR 5.2 billion and deposits of EUR 6.15 billion.
Axa, a French insurer, has agreed with Uniqa Insurance Group, an Austrian insurer, to sell its central and eastern European operations in Poland, Czech Republic and Slovakia for about EUR 1 billion. Uniqa is said to have edged out rival bids from Assicurazioni Generali and Vienna Insurance Group.
Fidelity National Financial, a Jacksonville, Florida, based provider of title insurance and transaction services to the real estate and mortgage industries, has agreed to acquire FGL Holdings, a US annuities and life insurance firm, in a deal valued at USD 2.7 billion. FGL generated USD 1.55 billion in revenue in the first 9 months of 2019.
Capital Group. a Los Angeles-based fund manager with USD 1.9 trillion in assets under management, has acquired a 3.1% stake in Deutsche Bank. The stake, worth around EUR 530 million, turns Capital group into Deutsche’s 5th largest shareholder.
Deals On The Table
China Life Insurance Group, the parent company of China’s largest life insurance company, is said to be considering a backdoor listing of its key businesses in Hong Kong this year. It is expected to inject its main assets into the listed China Life Insurance Co which will in turn issue new shares to the parent.
Russia’s central bank is said to be selling its controlling stake (50% plus 1 share) in Sberbank (which holds about 1/2 of the country’s retail deposits) to the ministry of finance “at a market price”.
Covea, a French insurer, is said to be in talks to acquire PartnerRe, a Bermuda insurer controlled by Italy’s Agnelli family, in an all-cash deal worth USD 9 billion. At about 1.3x times its June 2019 book value, the deal would value PartnerRe about 20% higher than the multiple of rivals Swiss Re or Scor.
Huishang Bank, a Chinese lender, is said to be considering raising up to USD 2.9 billion from tier-2 bond issue for liquidity purposes after taking over Beijing, Shenzhen, Chengdu and Ningbo branches of Baoshang Bank. Baoshang was taken over by the Chinese financial regulators in summer 2019.
Metrics To Watch
ABN Amro’s, a Dutch lender, cost-to-income ratio has risen to 61.2% in 2019, up 240bps over 2018.
Commerzbank’s, a German lender, medium-term (to be reached by 2023) target of 4% return on equity is below its cost of capital of about 10%.
Follow The Money
VTB, Russia’s state-owned bank, has finalised the sale of a 55% stake in Tele2 Russia, a mobile phone operator, to Rostelecom, a state telecoms group. The bank will receive USD 1.71 billion in cash and 10% of Rostelecom’s ordinary shares.
VTB is said to be selling its 21.4% stake in En+ Group back to the company for USD 1.6 billion. En+ has stated that the price “represents a significant discount to En+ fundamental valuation”.
BNDES, a Brazilian development bank, has sold its stake in Petroleo Brasileiro, a state-controlled oil company, for USD 5.2 billion.
N26, a German digital bank, is said to be planning to withdraw from the UK market “in the coming months” because of Brexit. Other sources suggest that the bank “had underestimated the cost and complexity of operating in the UK”.
Chime, a US “online-only” bank servicing 7 million customers, raised USD 500 million in late 2019 at a USD 5.8 billion valuation.
Starling, a UK digital challenger bank, has raised GBP 60 million “to fund the growth of its business banking service and a long-planned international expansion”. Details on valuation were not disclosed.
Almost 1/2 of all debt and equity issuance for non-financial institutions in the eurozone between 2012 and 2018 was carried out by global banks from London.
A Thought Worth Noting
“Human plus machine dramatically outperform humans on their own, and the machine on its own is on a par with the human.”
Evan Schnidman, founder and CEO, Prattle Analytics
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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.