Natixis to Sell Most of Coface Stake in $521 Million Deal

(Bloomberg) -- Natixis SA agreed to sell most of its remaining stake in credit insurer Coface SA to Arch Capital Group in a 480 million-euro ($521 million) deal that may allow the French lender to return more execess cash to shareholders.

Arch Capital, a U.S. specialty and mortgage insurer, will acquire 29.5% of Coface at 10.70 euros a share, Natixis said Tuesday. That’s a discount of 6% to Monday’s closing price. The French bank will keep its remaining 12.2% stake as a financial investment.

Natixis took Coface public in 2014, but the shares barely budged from their offering price of 10.40 euros since then. The disposal will result in a goodwill impairment of about 100 million euros in the first quarter, while strengthening a measure of the bank’s capital strength by 35 basis points.

“The insurance credit activity wasn’t part of our core business,” Natixis Chief Executive Officer Francois Riahi said on a conference call. “It has no synergies with our other activities.”

Shares of Natixis were down 0.7% in Paris trading as of 9:27 a.m. Coface gained as much as 3.7% and was up 1.1%.

What Bloomberg Intelligence Says

The sale “will continue Natixis’s rehabilitation and step up its capital-return capacity. Proceeds will be returned by dividend and CET1 boosted by 35 bps, both incrementally positive.”

-- Jonathan Tyce, BI banking analyst

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Riahi said the sale will boost Natixis’s equity by about 350 million euros, enhancing the company’s ability to distribute money to shareholders. The bank’s remaining stake in Coface won’t be subject to a lockup period, and Natixis may decide to sell it at some point, he said.

The CEO earlier this month signaled higher payouts for investors as he seeks to draw a line under a series of missteps since he took over in mid-2018.

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