Corporate Financier’s Notes
by Aivars Jurcans
Done! And Done
Aon, the world’s 2nd largest insurance broker, has agreed to acquire Willis Towers Watson, the 3rd largest insurance broker globally, in an all-share deal for USD 30 billion. The combined company will become the world’s biggest commercial insurance broker with total revenues of USD 19 billion based on 2018 figures. The combination of the two groups is expected to unlock USD 800 million of synergies.
Aviva, a UK insurer, has agreed to sell its entire stake in PT Astra Aviva Life, a JV in Indonesia, to its partner in the operation. The deal is expected to close n Q4 2020.
Hauck & Aufhaeuser, a German lender (owned by Fosun, a Chinese conglomerate) has agreed to buy Bankhaus Lampe, another German lender (owned by the Oetker family). The terms of the deal were not disclosed. Previous reports have suggested a value of Bankhaus Lampe equity at about EUR 250 million.
Deals On The Table
Bank of Jinzhou, a Chinese lender, is said to be raising USD 1.7 billion in fresh capital from 2 investors, one of which is Chengfang Huida, a subsidiary of China Cinda Asset Management (one of China’s biggest “bad banks”). The deal will make Chengfang Huida the bank’s largest shareholder with a 37.7% stake, while Liaoning Financial Holding, a state-owned vehicle from Liaoning province (where Jinzhou Bank is based) will take a 6.7% stake.
Bank of East Asia, a Hong Kong lender, is said to be considering options including a sale of insurance assets. BEA could seek more than USD 1 billion from a sale of assets including its life and general insurance and its pension fund business in Hong Kong.
Intesa Sanpaolo is said to go ahead with its plan to take over UBI Banca, its smaller rival, if at least 50.1% of its shareholders adhere to the offer.
Prudential is said to be considering to either sell or to float a stake in Jackson, its US business. Prudential has owned Jackson since 1986 when it bought it for USD 610 million. Jackson, which specialises in variable annuities, is estimated to be worth around GBP 6.5 billion today.
The European Bank for Reconstruction and Development is said to be seeking to buy a stake in Banque du Caire as part of the state-owned lender’s IPO. Banque du Caire expects to raise USD 500 million by offering a stake of 20% to 30%.
Petershill, a unit of Goldman Sachs, is said to be in talks to buy “a minority stake” in Permira, a private equity firm, for EUR 500 million. The deal would value the buyout group at more than USD 5 billion.
State Bank of India, the nation’s largest lender, is said to have been selected by the government to lead a consortium that will inject new capital into Yes Bank, India’s 4th largest private lender. SBI expects to have to invest up to USD 331 million to buy a 49% stake.
Source: Bloomberg, Reuters
Thanks, But No Deal
Caixa Seguridade, a Brazilian insurer, is said to have decided to cancel its IPO because of the concerns about the coronavirus and plunging oil prices. It was expected to raise more than USD 2.12 billion.
Metrics To Watch
Legal & General’s solvency ratio – a measure of capital available as a proportion of the minimum required – was 184% at the end of 2019, but have been pushed down as a result of financial market movements by 10 percentage points since then.
On The Baltic Shores
Swedbank’s, a Swedish lender, internal investigation into money laundering has found 586 transactions totalling USD 4.8 million that could have broken US sanctions. More than 500 of the potential breaches related to salary payments and transactions covering the operation of a ship in Crimea.
“Minsky Moment” – a reference to the late economist Hyman Minsky’s theory that stability breeds complacency, and that eventually leads to a sudden crash.
Global equities have lost about 16% of their value since the February peak.
Swedbank, a Swedish lender, has set out 152 initiatives to improve its anti-money laundering policies and combat financial crime.
A Thought Worth Noting
“If central banks don’t inject enough liquidity and if governments don’t do enough to support companies and prop up the confidence of the public and investors, then there will be panic in markets and there will be larger [falls in] economic growth. This is a decisive hit to growth at a time of global economic vulnerability, The worst thing they can do is to do too little.”
Andrew Law, CEO, Caxton Associates (a USD 4.3 billion hedge fund)
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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.