Arete Financial Partners

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    Buy Side Due Diligence on Retail Banking & Wealth Portfolio of MNC Bank

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    Buy Side Due Diligence on Retail Banking & Wealth Portfolio of MNC Bank The HQ of a European Bank in India invited limited bids for its retail banking business in India. Arete was commission by the buyer to evaluate the suitability of the portfolio given that the potential buying bank was listed. The principal mandated Arete to provide end to end services including Evaluation Approach 2.5 Months Time taken to complete Initial due diligence including financial impact 45 Days Time taken to do confirmatory due diligence Approach & Key Challenges Challenges The seller had complex operations in India which were spread across its banking entity as well as an NBFC. This distribution of business across two entities posed complexity in acquisition, regulatory compliance and resources. Lastly, the potential buyer did not have a wealth management offering and platform. Approach Arete conducted an end-to-end due diligence including various simulation of client / people attrition due to inability to integrate within banking. A regulatory road map including license requirements was contructed

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    Lead on Buy Side Card Business Acquisition in India

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    Lead on Buy Side Card Business Acquisition in India The client was eager to enter the Credit Cards business which would enable it to establish itself as a retail bank with a complete product suite. When a global bank put its Credit Cards business up for sale, Arete was commissioned to assess the value of the business and providing end-to-end investment advisory services. Arete advised the bank in 4 stages namely: Deal Evaluation, Due Diligence, Operational Due Diligence, Negotiation and Deal Structuring Due Diligence Drivers Impact ‘Client Acquired and Integrated the Portfolio, despite NOT being the highest financial bidder’ Approach & Key Challenges Arete carried out the pre-sale due diligence and developed models to show the true potential of the acquisition. The due diligence was carried out in multiple stages and Arete developed its own analysis including a prices recommendation Arete established rapport with the seller and its operating team to provide comfort and assurance. Buyers apprehension was allayed with data and factual information which all implied a value accretive acquisition.

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    Due Diligence of MFI Company for a Private Equity Fund

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    Due Diligence of MFI Company for a Private Equity Fund Our client, a private equity player was exploring investment in Micro Finance. The client required a due diligence with focus on MFI credit and collections.  This was a follow on due diligence with the initial due diligence already conducted. The client wanted Arete to provide a credit performance sustainability view as well as an independent risk assessment. The PE also wanted recommendations to improve processes of the MFI Evaluation Approach Quantitative & Qualitative Inputs Data Analysis Feedback Meetings & interviews Minutes & Presentation Audit reports Approach & Key Challenges Challenges Being an MFI the credit profile of customers as well as instruments of collections were different that traditional banks. Methods such a AEPS had to be verified. MFI used a shared BA network Approach Arete executed a comprehensive DD including Portfolio Performance Credit Initiation Process Control & Monitoring Processes Internal Audit Review End Use Monitoring

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    Group Strategy Creation & Transformation Execution

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    Group Strategy Creation & Transformation Execution One of the largest banks in Zambia want to create 3-year road map to become a top transactional bank in Zambia. This included business transformation, technology rationalization and creation of a digital banking platform which was previously not present. In addition, the bank wanted to relook at its credit and operational risk practices Impact 4X Client Growth USD 5Mn Annual Cost Savings Digital Bank Setup & Launch 35% Revenue Increase Approach & Key Challenges Key Challenges Manual, paper-based processes Disparate IT Infra and Tech stack with local development Fragmented product proposition Approach Arete conducted a detailed study, which included interviews, market scans, competitor mapping etc to understand opportunities that the target market presented For group strategy Arete conducted multiple sessions with leadership team and board to set ………………. 3 Business Ambition and Case with Financials Detailed Implementation Road Map Target Operating Model for ………………. Corporate Bank Commercial Bank Retail Bank Digital Bank

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    Lead Sell Side Advisor to MNC Bank in Indonesia

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    Lead Sell Side Advisor to MNC Bank in Indonesia Post strategic review, a Global Bank’s business based in Indonesia was evaluating strategic options for a Portfolio Divestment. Arete created and executed a divestment strategy to achieve the best value realization for the client. Strategy required alignment of business, processes, technology and business verticals. Approach & Key Challenges Challenges Client alignment mismatches on operational processes, technology, underwriting and collections Limited involvement of management Strategy Formation ◦ Portfolio Deep Dive ◦ Strategic Options Presented ◦ Strategy Development for Divestment ◦ Strategy Implementation Plan Preparatory ◦ Project Management ◦ IM information & RII interface ◦ Financial Projections ◦ Transaction strategy ◦ Management & Q&A ◦ VDR index review & document upload Data Room ◦ Data room set up ◦ Management preparation ◦ Anticipate Q & A Due Diligence ◦ VDR access control ◦ Q & A management ◦ Bid Evaluation

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    APAC Sell Side Advisory for Global Private Bank

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    APAC Sell Side Advisory for Global Private Bank A Global Private Bank wanted to realize best value of its APAC Private bank by either exploring inorganic growth opportunities or sell out at premium. Arete worked with the client to develop a Regional Five-Year Strategy which entailed cost reduction initiatives and inorganic growth options. Transaction Strategy & Pre Planning ◦ Strategy- preserve value ◦ Identify Value drivers ◦ IM story line & positioning ◦ Project Plan ◦ Governance set- up ◦ Teaser evaluation ◦ Data Harvesting & compilation Sell Side Due Diligence & Financials Carve-Out ◦ Sell-Side DD ◦ Quantify impact of divestment ◦ VCO identification ◦ Support financials carve out ◦ Structure financial projections ◦ Review IM ◦ Preparation & Setup → VDR, PDR → Q&A ◦ Review non- binding bids Sale Process Execution ◦ Information, Data, Document management ◦ VDR management ◦ Q&A tracking & resolution ◦ Support Management presentations ◦ VDR/PDR issues & resolution ◦ Stakeholder Management Negotiations & Signing (Deal Signed) ◦ Support CDD ◦ Separation plan/strategy ◦ Management plan for TSAs ◦ Support design of → Severance plan → Transaction structure ◦ Review draft agreements ◦ Mitigation strategies Spin-Off & Closing (Legal Day 1) ◦ Separation Management & PMO ◦ Integration requirement of Buyer ◦ Augment internal resources Key Challenges Challenges Prioritizing Initiatives during BAU operations Cost Control and Reduction Value Realization Sale of APAC Business

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    Sale of USD 750 Mn International Diamond & Jewellery Portfolio of a Global Bank

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    Sale of USD 750 Mn International Diamond & Jewellery Portfolio of a Global Bank A Global bank in its strategy re-alignment decided to exit its International Diamond & Jewellery business which was in Dubai, Hong Kong and India. This business was extremely specialized with very limited number of participants itself. Arete worked with the client in the successful sale of the business. Arete conducted IDJ Portfolio Analysis Dubai, Hong Kong & India Strategic Options Presented to Client Board India Chosen by Board as focus country Arete conducted Business Alignment & Sale Preparation Successful Exit Delivered Key Challenges Challenges Extremely niche segment Limited buying interest Business Embedded withing Corporate Banking which was not being sold.

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    Digital branch with full functionality of a traditional branch, 100% paperless with STP

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    Digital branch with full functionality of a traditional branch, 100% paperless with STP A foreign bank in Laos wanted to expand its branch footprint in Laos. The bank wanted to create a differential branch banking proposition while providing exceptional client experience. Laos is a high cash economy with low banking penetration. In addition, few people have  digitally verifiable Government Issued ID’s. Lastly, wet signatures were recommended for transactions by the central bank. Impact 1st 100% Digital Branch in Loas 5 Min Digital Account Opening Digital KYC Using OTP and Facial Recognition Zero Teller Branch Approach & Key Challenges Key Challenges Non consistent Client ID’s Heavy Cash Usage Manual Non-Digital Processes Approach Arete mapped the operational processes, regulatory guidelines and existing bank IT architecture. Worked with the regulatory to seek approval for digital KYC including digital authentication using OTPs and Facial Recognition Created STP 100% digital workflows with NO use of paper. Eliminated Cash Teller from Branch

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    Credit Card Product and Portfolio Strategy

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    Credit Card Product and Portfolio Strategy The client a top 10 private bank in Malaysia was looking to revitalize its credit card business. In addition, due to the pandemic the overall credit card market had seen decline. The client was eager to explore different avenues to profitably increase  its market share. Impact 25% Increase in Card Fee Collection 30% Lower Delinquency 28% Higher Spends Per Card ◦ Lower Cost of Operations ◦ Increase in Efficiency ◦ Digital Distribution Approach & Key Challenges ………………… Steady decline in the overall credit card issuance and usage – post pandemic Rising credit costs and government sanctions on financial institution. Analysis of data led to the following discoveries Free Issuances of Premium Cards has led to dilution of brand value and thus low utilization with high spenders. Card products had shifted to lower segment than target market. This shift was leading to ………………. Higher credit costs Lower spends per card Lower MDR earnings ……………………. Dilution of CVP Recommendations ………………… Restoration of Market Positioning by enriching CVP and increasing product pricing Free card issuance limited to mass / mass affluent segment

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    Buy Side Due Diligence on Retail Banking & Wealth Portfolio of MNC Bank

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    Buy Side Due Diligence on Retail Banking & Wealth Portfolio of MNC Bank Our client was keen to grow market share amidst a competitive and saturated banking market. In order to accelerate its growth plans Arete was hired to provide full investment banking services for the acquisition. Market Sector Evaluation Market study and peer analysis to ensure deal soundness and integrity Due Diligence Conducted a full due diligence on the target to ensure the financial feasibility of the deal was robust. Valuation & Analysis Modeling market comparison and DCF method to ensure premium is qualified Deal Structuring Financial feasibility and Business Plan for the acquired businesses, target design on Legal Day one Negotiations Rounds of negotiations to ensure value was maximized Integration Driving the integration planning and effort for the acquisition together with action planning Approach Arete provided end-to-end investment advisory support from initial evaluation through to integration planning.

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