Corporate Financier’s Notes by Aivars Jurcans
Done! And Done
KKR, a US buyout group, has agreed to acquire a 55% stake in Colonial First State, a wealth management arm of Commonwealth Bank of Australia, for USD 1.1 billion. KKR will pay a multiple of 15.5x times Colonial’s pro forma net profit after tax.
PNC Financial, a Pittsburgh-based bank, “intends to exit its full investment” in BlackRock, an asset manager. The PNC-owned 22% stake which was purchased in 1995 is valued at about USD 14 billion. The bank will exit the stake through a public secondary offering with BlackRock buying back USD 1.1 billion of the shares directly from the firm.
Source: FT, Bloomberg
Deutsche Bank has sold EUR 1.25 billion of new bonds that count towards its tier 2 debt (one notch above the highest risk additional AT1 or “contingent convertible” bonds) at a yield of 5.7%.
Deals On The Table
BNP Paribas Cardif, an insurance arm of the French lender, is said to be in talks to buy “a significant minority stake” in PT Asuransi BRI Life, a life insurance arm of PT Bank Rakyat Indonesia.
Banrisul, a Brazilian state-owned bank, is said to be in talks to sell its card business. The bank had filed for an IPO of the unit 2 years ago, but gave up on the transaction in November 2018. At the time, it expected to reach USD 432 million valuation.
Anima Holding, an Italian asset manager, is said to be able to spend up to EUR 400 million “to buy a smaller rival abroad and to expand in Europe” – the UK, France, Netherlands and Belgium. Anima has EUR 176 billion in assets under management.
Thanks, But No Deal
Covea, a French insurer, said it was no longer willing to go ahead with the acquisition of PartnerRe, a Bermuda-based reinsurer, “on the terms originally envisaged”. In March 2020 Covea had agreed to pay USD 9 billion for the reinsurer which is owned by Exor (a holding company controlled by the Agnelli family). The original offer price was equal to 1.3x times book value, a 1/5 premium to listed rivals such as Swiss Re.
AMP, an Australian wealth manager, is said to have decided to scrap its plans to divest the New Zealand wealth management arm after offers for the unit fell short of expectations.
Not So Fast
WEX, a financial technology provider, said it could walk away from the USD 1.7 billion deal to acquire eNett and Optal, the travel payment services providers, “because of the impact of coronavirus outbreak” on their business.
Far Point Acquisition Corp, a listed blank-cheque company, said that the deal to acquire Global Blue, a Swiss payments company, for USD 2.6 billion (as agreed in January 2020) “is no longer in its interest because of the worsening “financial condition” of Global Blue”.
Metrics To Watch
ABN Amro’s. a Dutch lender (56% owned by the state), net interest margin slipped 7bps to 155bps in Q1 2020.
Follow The Money
Goldman Sachs is said to be considering acquiring “a large group of company stakes” form Invesco, an asset manager, which looks to shift illiquid holdings. The holdings could be valued “at several hundred million” pounds.
Toss, a South Korean fintech, is said to have embarked on a funding round to raise about USD 200 million to finance its expansion in online banking and securities trading services. The expected valuation is not disclosed.
The debt burden of the so-called frontier countries has climbed from less than USD 1 trillion in 2005 to USD 3.2 trillion, according to Institute of International Finance, equal to 114% of gross domestic product for frontier markets. Emerging markets as a whole owe a total of USD 71 trillion.
The world’s largest 1% of investment groups manage 61% of total industry assets. This is 243x times that of the bottom 50%, compared with 208x times at the end of 2019 and 105x in 2010.
According to Paul Tudor Jones’ calculation, USD 3.9 trillion of money, the equivalent of 6.6% of global economic output, has been printed since February 2020.
A Thought Worth Noting
“We saw an earlier-than-expected apex and lower peak of hospital resource use, broader-than-expected spread of the virus, and estimate a lower mortality rate than consensus models. This means economic activity could pick up sooner than most expected, and any potential future virus waves are likely to be less severe.”
Marko Kolanovic, head of quantitative and derivatives research, JPMorgan
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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.