ANZ To Seek Further Acquisition Opportunities

Post by Sharat on September 28, 2009 · Under Business News, Capital Markets, Company News, Equities, Life Insurance, Mergers & Acquistions, Wealth Management, banking, insurance · Comment

Australian banking major ANZ may raise a further $2 billion in capital, bulking up its war chest as it seeks further acquisitions which take advantage of opportunities that have arisen from European lenders that are distressed as a result of the global financial crisis.

According to a report in The Australian, ANZ intends to raise as much $2 billion from the market, which, when leveraged could be used to fund acquisition opportunities that cost as much as $5 billion.

Last week ANZ announced that it would be buying out its life insurance and wealth management joint venture partner ING in a transaction worth $1.8 billion.

ANZ chief Mike Smith in China to open its first regional branch in that country, making ANZ one of the few international lenders with a wholly owned Chinese operation, said that he favoured foreign investment banks and insurance companies as the most likely targets.

“We have raised $9bn over the past two years in a very systematic way. People haven’t really realised we have been doing it, because it’s been quite a softly, softly approach. People thought we were last out of the blocks, but really we were first in terms of adding quite an additional bit more capital than we needed. We could go into the market with quite a big hybrid offer, and even after this deal we are still looking very strong.” Mr. Smith told The Australian.

Mr. Smith said he believes that the Dutch government put enormous pressure on ING to divest some of its international assets, after the financial services firm was forced to seek government support in order to weather the financial crisis.

“It was the global financial crisis that allowed us to do it — we were locked in. In fact, we had a look at the Aviva deal but we couldn’t move unless ING were prepared to move.” Mr. Smith said.

In June, NAB acquired British insurer Aviva PLC’s Australian insurance and wealth management businesses for $925 million, outbidding AMP.

The transaction was similar to the ING deal, in the sense that the financial crisis allowed both NAB and ANZ to behave predatory, and acquire businesses that ordinarily would not have been put up for sale, and at relatively low valuations.

“We have seen the opportunities and moved on them, so fortune favours the brave, doesn’t it? This is the time to do it. You might as well have your powder dry, it gives us an opportunity to grow. We have positioned the balance sheet to do this sort of stuff and I think there is a couple more that we can do.” Mr. Smith said.

Mr. Smith is keen for ANZ to scale up its Asian wealth management business, believing the market to be nascent. “I want to be up there with the best of them, and I want to take that knowledge into Asia.”

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