Asset redeployment could close the gap to peers trading above book.
This investment idea boils down to getting exposure to a fintech sponsor bank at ~0.75x TBV, right as it transitions to a new management team with a strong track record. The incoming team plans to reposition the bank’s under-earning asset portfolio and materially improve profitability, arguing that this will drive the valuation closer to peers that trade at a substantial premium to book value. At ~0.75x TBV, the downside looks well protected.
While the full re-rating will probably take some time to play out, the pending corporate restructuring is expected to close in a month and could serve as a soft catalyst.
This post is for paid subscribers, to continue reading please log in or sign up.