As part of its efforts to simplify business, Australia and New Zealand Banking Group Limited ANZBY has agreed to sell its New Zealand-asset finance business — UDC Finance — to Shinsei Bank Limited for NZ$762 million. Closing of the deal, subject to regulatory approval, is expected in the second half of 2020.
Through both banking as well as non-banking business divisions, Shinsei Bank operates asset financing as well as vehicle and consumer-lending businesses.
The deal value represents a premium of NZ$125 million to net tangible assets, which stood at NZ$637 million as of Mar 31, 2020. Moreover, it represents a price-to-book ratio of 1.2 times net tangible assets.
The transaction will provide AUD$439 million or 10bps of Level 2 Group CET1 capital at settlement.
Notably, the sale is expected to further strengthen the company’s balance sheet position as it will result in the release of more than NZ$2 billion of funding provided by ANZ New Zealand.
Antonia Watson, CEO of ANZ New Zealand, stated, “With a strong outlook for infrastructure and agriculture projects as the New Zealand economy rebuilds post-Covid-19, there is a significant role for UDC Finance to play. As such, it needs an owner that can invest in and grow the business.”
She added, “Shinsei Bank intends to preserve UDC’s operations, retain UDC employees and provide long term capital to maintain and grow customer lending in New Zealand. The sale will also mean UDC Finance will continue to operate as an independent finance company and enhance competition in the asset finance market.”
Hideyuki Kudo, CEO of Shinsei Bank, said, “I am very excited that UDC will become a part of the Shinsei Bank Group, in line with our non-organic growth strategy in this business area. In the Covid-19 ‘New Normal’, we are confident that UDC, as part of Shinsei Bank Group, will continue to grow and contribute to the development of the New Zealand economy and help people and businesses in New Zealand with their financial needs.”
Shares of ANZ have lost 28.7% so far this year compared with a decline of 35.5% recorded by the industry.
Currently, the company carries a Zacks Rank #3 (Hold).
A few better-ranked stocks from the finance space are mentioned below.
Merchants Bancorp’s MBIN current-year earnings estimate has moved 11.4% upward over the past 60 days. The stock has depreciated 8.6% over the past six months. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
GAIN Capital Holdings’ GCAP current-year earnings estimates have moved up significantly over the past 60 days. Further, the company’s shares have gained 48.6% over the past six months. At present, it carries a Zacks Rank of 2.
West Bancorporation’s WTBA current-year earnings estimates have moved up 13.9% over the past 60 days. The company’s shares have declined 26.8% over the past six months. At present, it sports a Zacks Rank of 1.
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