Corporate Financier’s Notes by Aivars Jurcans
Done! And Done
Aon and Willis Towers Watson, the insurance brokers, have agreed to sell USD 3.6 billion worth of assets to Gallagher, their rival, to mollify European competition regulators over the USD 30 billion deal.
PPF, a Czech financial group, and MONETA Money Bank have agreed to combine their Czech lending assets creating a USD 3.01 billion challenger to the country’s 3 biggest banks.
Deals On The Table
American National Group, a US insurer, is said to be exploring options that include a sale of the company. American National, which is still majority-owned by its founder’s family and offers life, health, property and casualty insurance as well as annuities, currently trades at 0.51x times price-to-book.
The UK government is said to be planning to cut its stake in NatWest for the 2nd time in 2 months by selling another 5% tranche. This transaction is expected to bring the government’s stake in the bank, previously known as Royal Bank of Scotland, to about 54.8%.
Better, a US startup mortgage lender, is said to be planning to go public by merging with a special-purpose acquisition company, at a valuation of roughly USD 7 billion pre-money. Better reported over USD 850 million in revenue and more than USD 200 million in net profits in 2020.
XP, a Brazilian broker, is said to be interested in acquiring the Brazilian subsidiary of Credit Suisse Group. A possible deal could double XP’s asset management business which currently has USD 20.9 billion under management.
Metrics To Watch
Commerzbank’s, a German lender, cost-to-income ratio after Q1 2021 stands at 72.5%; a target ratio of 66% increasingly looks achievable.
Ethos Technologies, a life insurance startup, has raised USD 200 million in a funding round valuing the business at more than USD 2 billion.
SoftBank is said to be considering listing PayPay, its QR code payment app, which has acquired almost 40 million users since launch in October 2018..
“Core banking”, the heavily regulated, capital-intensive activity of banks, makes around USD 3 trillion in revenue and generates a 5-6% return on equity. Payments and product distribution, the business of the tech firms, yields USD 2.5 trillion in sales but with a ROE of 20%.
Source: The Economist
The total assets of the world’s biggest 1,000 banks were worth some USD 128 trillion in 2020, dwarfing annual global gross product of USD 84.5 trillion.
Source: The Economist
A Thought Worth Noting
“We want people back at work and my view is some time in September, October, it will look just like it did before. Yes, people don’t like commuting, but so what? … I’m about to cancel all my Zoom meetings. I’m done with it.”
Jamie Dimon, chief executive, JPMorgan
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