US tops cross border M&A activity in financial services sector in 2018, finds GlobalData

The US registered the highest outbound as well as inbound mergers and acquisitions (M&A) investments volume in the financial services sector in 2018, finds GlobalData, a leading data and analytics company.

Outbound M&A deals

All the top 10 countries witnessed an increase in the number of outbound investments in 2018 as compared to the 2014-2017 average.

In contrast, five of them witnessed decline in disclosed investment value in 2018 as compared to the 2014-2017 average.

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In terms of deal volume, the US occupied the top position with around 130 outbound M&A deals in 2018, which is an increase over 2014-2017 average of 77.3 deals.

Aurojyoti Bose, Financial Deals Analyst at GlobalData, comments: “By virtue of tax reforms (leading to savings on tax) in the country, American financial service providers had sufficient capital to undertake M&A in 2018.”

The US was distantly followed by the UK with around 70 outbound M&A deals in 2018. However, with disclosed investment value of US$20.1bn, France occupied the top position in terms of value and was ahead of both the US and the UK.

France also registered the highest growth in disclosed investment value in 2018 as compared to the 2014-2017 average.

Bose adds: “The growth in deal value is primarily attributed to some of the high value outbound acquisitions undertaken by French companies during 2018.”

Some such notable acquisitions included the acquisition of XL Group by AXA for US$15.3bn and Worldline’s acquisition of SIX Payment Services for US$2.7bn.

Hong Kong occupied the top position in terms of volume growth.

Inbound M&A deals

All the top 10 countries, except India, witnessed an increase in the number of inbound investments in 2018 as compared to the 2014-2017 average.

However, majority of these countries witnessed decline in disclosed investment value in 2018 as compared to the 2014-2017 average.

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Similar to the outbound M&A, the US led in terms of the number of inbound M&A deals with announcement of 90 deals in 2018 followed closely by the UK with around 80 deals.

However, the UK outpaced the US to occupy the top position in terms of investment value in 2018. The US was also among the nations that witnessed decline in disclosed investment value in 2018 as compared to the 2014-2017 average.

China occupied the top position in terms of volume growth while Ireland registered the highest growth in disclosed investment value in 2018 as compared to 2014-2017 average.

Bose continues: “While geographic expansion remains the key to cross-border M&A in the financial services sector, focus on embracing new technologies through acquisition of FinTech companies or their assets also continues to be among the top agenda of acquirers.”

For instance, France-based provider of transactional solutions Edenred entered into an agreement to acquire Corporate Spending Innovations, a US-based provider of automated corporate payment software, in November 2018.

Earlier in August 2018, American insurance company Travelers acquired a majority stake in the Canadian FinTech firm Zensurance.

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