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Citizens Financial (CFG) on Buyout Spree, To Buy DH Capital

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Citizens Financial Group, Inc. (CFG - Free Report) continues to enhance its growing corporate advisory capabilities. The company has announced a definitive agreement to acquire substantially all assets of DH Capital LLC. DH Capital is a New York-based private investment banking firm, catering companies in the Internet infrastructure, software and next-generation IT services, and communications sectors.

DH Capital has completed more than 200 merger and acquisition transactions, aggregating $35 billion in value.

The acquisition deepens Citizens Financial’s M&A Advisory team’s expertise in the digital-infrastructure sector, thereby, offering a more comprehensive set of solutions to clients. The move marks the company’s third acquisition over the past four months to augment its corporate advisory team. In September, the company closed the buyout of Willamette Management Associates and it acquired JMP Group in November.

The transaction will be funded with cash. The deal is anticipated to close in first-quarter 2022, subject to regulatory approvals. Per deal terms, Citizens Financial’s wholly-owned subsidiary, Citizens Capital Markets, Inc. (“CCMI”), will acquire substantially all of the assets of DH Capital LLC post, which DH Capital will operate as a division of CCMI.

Per Citizens Financial, “The DH Capital team brings us deep expertise in the digital infrastructure sector, a key and ongoing area of opportunity in today’s highly dynamic commercial market.”

The acquisition is also strategic for DH Capital as it expands its service portfolio to include additional debt and equity financing solutions, and treasury services through a national network of professionals.

A robust liquidity position has enabled Citizens Financial to pursue inorganic growth opportunities. Notably, as of Sep 30, 2021, the total available liquidity was $76 billion. As of the same date, long-term borrowed funds were $6.95 billion, significantly lower than liquidity.

Over the past six months, shares of Citizens Financial have gained 6.5% compared with 3.4% growth of the industry.

 

Zacks Investment ResearchImage Source: Zacks Investment Research

 

Currently, Citizens Financial carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Inorganic Growth Efforts by Other Firms

Several companies from the finance sector are undertaking consolidation efforts to counter the low-interest-rate environment along with heightened costs of investments in technology.

In early December, United Bankshares, Inc. (UBSI - Free Report) announced the completion of its merger deal with Community Bankers Trust Corporation. This June, United Bankshares entered an all-stock deal to acquire Community Bankers, the parent company of Essex Bank.

The buyout has brought together two high-performing banking companies. It also bolsters United Bankshares’ position as one of the largest and best-performing regional banking companies in the Mid-Atlantic and Southeast. The combined entity will now operate across 250 locations in opportunistic markets in the United States.

First Financial Bancorp. (FFBC - Free Report) agrees to acquire the fourth-largest independent equipment financing platform in the United States, Summit Funding Group. The deal completion, subject to customary closing conditions, is expected in the fourth quarter of this year.

The acquisition of Summit is expected to be accretive to First Financial’s earnings per share by mid-single digits in 2023 (the first year post-integration). Thereafter, on a run-rate basis, the deal is expected to be accretive to earnings by low-double digits.

U.S. Bancorp’s (USB - Free Report) primary subsidiary U.S. Bank completed the deal to acquire PFM Asset Management LLC. The acquisition was carried out through U.S. Bancorp Asset Management. The deal to acquire PFM Asset Management was announced this July.

U.S. Bancorp’s several acquisitions over the past years have enabled the company to foray into untapped markets and fortify its footprint in existing geographies.