Corporate Financier’s Notes by Aivars Jurcans
Done! And Done
Liontrust, a London-listed fund manager, has agreed to buy the Architas UK investment business from Axa, a French insurer, for up to GBP 75 million. The deal will increase Liontrust’s assets under management and advice by GBP 5.6 billion to GBP 25 billion.
Generali, an Italian insurer, has agreed to pay EUR 300 million for a 24% stake in Cattolica Assicurazioni, a troubled Italian rival part-owned by Berkshire Hathaway, valuing the company at EUR 1.25 billion. Cattolica’s solvency ratio fell from 183% at the end of 2019 to 133% in June 2020 and it has been ordered by regulators to raise EUR 500 million in capital.
Singapore Exchange has agreed to pay about USD 128 million to buy the 80% stake it does not own in BidFX, a trading platform, “to build its presence in foreign exchange futures and the over-the-counter market”. SGX first acquired 20% of BidFX in March 2019.
Deals On The Table
EQT, Blackstone and Bain are said to be among those to have advanced to the final round of bidding for a minority stake in Aareon, the software business of Aareal Bank (a German real estate lender). Aareon is expected to be valued at EUR 500-600 million as a whole, including debt.
Wirecard North America, a unit of the now insolvent German company, is said to be seeking to be acquired. It claims that “the strong, independent cash flow and financial position allows us to operate the business on a completely standalone basis”.
Banca Monte dei Paschi di Siena, an Italian government-backed lender, is said to be planning to slash its exposure to bad debt by about 2/3 by selling EUR 8.14 billion of non-performing loans and cutting its non-performing exposures from the current 12.4% to 4.3%.
National Commercial Bank, the largest Saudi lender with a market value of almost USD 30 billion, is said to be in talks to acquire Samba Financial Group, one of Saudi Arabia’s top 5 largest banks, for up to USD 15.6 billion. The deal would create the Gulf’s 3rd biggest lender with almost USD 214 billion in assets.
Alpha Bank, a Greek lender, is said to be close to finalising a deal to sell a portfolio of bad loans worth more than EUR 1 billion to Fortress Group, a US investment manager. The portfolio (known as Neptune) consists of mid-size corporate loans backed by commercial property collateral.
Lemonade, an insurance startup, is said to be looking to raise up to USD 308 million in its US IPO. The higher end of the range gives it a valuation of USD 1.54 billion.
M&A between European banks have fallen to 77 deals worth just over USD 6 billion in 2019, the lowest number for over a decade and a tiny fraction of the 218 deals worth USD 123 billion of such deals done on the eve of the financial crisis in 2006.
China has leapfrogged the UK and France to become the world’s 5th largest fund domicile in Q1 2020 accounting for 4.1% of worldwide fund assets.
The US is the largest fund domicile, controlling 47.9% of the market followed by Luxembourg with 8.8%, Ireland with 5.8% and Germany with 4.6%.
The US non-bank lenders account for more than 1/2 of all mortgages issued.
A Thought Worth Noting
“Well-designed and well-executed consolidation can help address the overcapacity and low profitability problems that have been damaging the European banking sector since the last financial crisis, and thereby contribute to the overall financial soundness of the banking system.”
Edouard Fernandez-Bollo, supervisory board member, European Central Bank
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