Corporate Financier’s Notes by Aivars Jurcans
Done! And Done
The People’s Bank of China, China’s central bank, has increased its stake in Housing Development Finance Corp, an Indian lender, from 0.8% to 1.01%.
KB Financial Group has agreed to buy a 100% stake in Prudential Financial’s South Korean unit for USD 1.89 billion. This marks Prudential’s exit from the South Korean market after 30 years.
Canoe Financial, a Canadian investment firm, has agreed to acquire the rights to manage retail mutual funds from Fiera Capital in a deal encompassing about USD 820 million in assets. The terms of the deal were not disclosed.
Deals On The Table
AMMB Holdings and Insurance Australian Group are said to have restarted a sale process of AmGeneral Insurance, Malaysia’s 2nd biggest auto insurer. The shareholders are said to be seeking as much as USD 1 billion from the transaction.
Citic Securities and CSC Financial, another Beijing-based brokerage, are said to have started the process of merging to create an investment bank valued at USD 67 billion (surpassing even Goldman Sachs) and with USD 142 billion in assets. Both companies have issued statements that they were not aware of any merger talks.
Source: Bloomberg, Reuters
Future Group, an Indian company backed by the Biyani family, is said to be considering to dispose of its share in Future Generali, a life and general business insurance JV with Assicurazioni Generali. It is said to be seeking to raise about USD 330 million from the sale.
Thanks, But No Deal
Banque du Caire, an Egyptian state-owned lender, has postponed its plans to sell a minority stake in an IPO this month “due to the spread of the new coronavirus globally and locally”. The bank expects to raise about USD 500 million from the sale.
Metrics To Watch
Goldman Sachs’s return on tangible equity for Q1 2020 was 6%.
Because of the impact of Covid-19, Citigroup no longer expects to hit its 2020 return on tangible common equity target of 12% to 13%. Its ROTCE, affected by the increase in provisions, was 6% in Q1 2020.
After falling by 1/3 this year, JPMorgan’s shares are still trading at 1.25x times book value.
“Distressed exchange” – an offer where companies forestall a bankruptcy by giving investors a steep discount on the value of their bonds in the form of new debt, stock or cash. Such deals are said to be preferred at private equity-backed companies saddled with debt, as they allow the buyout firms to stay in control.
Bank credit to eurozone firms and households are currently close to 90% of GDP, according to data from the Bank for International Settlements, compared with about 50% in the US.
A Thought Worth Noting
“Sometimes the best alternative is really just the least worst. That is a very hard thing for people to accept.”
Vincent Indelicato, bankruptcy attorney, Proskauer Rose
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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.