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M&A insights: EY's $2.5 billion funding and PhonePe becomes India's most valuable payments app

Updated: Mar 7

Here are some of the significant news in the dealmaking industry across the last two weeks:

1. Standard Chartered Eyes Sales of US$3.7 billion aircraft leasing business:

Standard Chartered Plc is considering the sale of its aviation leasing business, including Pembroke aircraft leasing subsidiary. The business, based in Ireland, owns and manages more than 120 planes on lease to 30 airlines, representing 2% of its operating income. The bank has been under pressure to improve its returns and cut another $1.3 billion of costs over the next three years, and the potential sale of its aviation leasing business is seen as a way to help achieve these goals by creating more room for investments in corporate and institutional banking. The announcement of the potential sale comes after First Abu Dhabi Bank, the Middle East’s biggest bank, announced that it was exploring a potential offer for Standard Chartered, but later stated that it was no longer pursuing it.

2. Big Four firm EY set for $2.5 billion funding

Ernst & Young (EY) is reportedly planning to earmark $2.5 billion to fund acquisition for its consulting arm after splitting from its audit business, The company aims to acquire an additional $1.5 billion in annual revenue over the next two years through strategic acquisitions in the consulting arm as it battles to win market share from its Big Four rivals and other consulting firms. Targets include firms that offer advice on corporate strategy, technology or ESG issues. EY’s global managing partner, Andy Baldwin, has stated that the firm has lost on average 25% of the revenue on every potential acquisition, due to the conflict of interest rules that restrict them from advising companies they audit. In addition to acquisitions, EY’s investment plans also include an increase in senior hiring and a boost to technology investments for the tax advisory business.

3. GM and LG cancels plans for 4th US Battery Cell Plant

General Motors (GM) and LG initially announced a joint venture for a $2.3 billion electric vehicle (EV) battery plant in Ohio in December 2019, with plans to also build plants near GM operations in Michigan and Tennessee. The forge is crucial to GM's future plans for EVs, as it aims to become the US leader in all-electric vehicle sales and compete with Tesla and other major automakers. However, it has been reported that GM is now seeking a new partner for the joint venture, as LG has been hesitant to commit to GM’s timeline for EV production due to the rapid pace of its recent investments with other automakers and economic uncertainty. This means that GM will continue to build the plant but with a new partner, in which the Detroit automaker has already held discussions with other suppliers.

4. Goldman Sachs AM closes $15.2 billion mezzanine fund:

Goldman Sachs Asset Management announced the final close of its West Street Mezzanine Fund VIII, the latest in a series of flagship mezzanine vehicles. Julian Salisbury, Chief Investment Officer for Asset & Wealth Management at Goldman Sachs, said: “We are deeply appreciative of the support from existing and new limited partners. The demand is a testament to our team’s experience and track record navigating market cycles in mezzanine debt over almost three decades." Goldman is a pioneer in mezzanine financing having raised their first fund in 1996 and delivered strong performances ever since.

5. KKR set to buy S&P Global's engineering solutions unit for $975 million:

PE giant KKR will purchase S&P global's engineering solutions business which services 6,000 customers across a number of industries. This move comes months after S&P Global said it would divest the business. "The divestiture of Engineering Solutions to KKR allows us to further focus on driving growth in our core businesses," S&P Global Chief Executive Officer Douglas Peterson said.

6. India's PhonePe raises $350 million from General Atlantic:

PhonePe, the Walmart backed digital payments app, is raising a second tranche of investments from global and local investors. This investment values PhonePe at $12 billion making it the most valuable player in this area. PhonePe is set to use this funding to further penetrate the lucrative Indian fintech space, building products in insurance, wealth management and lending.

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