Translated material
Contrary to the market conditions
Bank St. Petersburg will hold an IPO before the end of the year
Despite the poor financial market conditions, which forced many Russian issuers to abandon the placement of their securities, Bank St. Petersburg announced yesterday its intention to conduct an IPO by the end of the year. Analysts found this decision strange - they are not sure that the bank will be able to successfully place its securities in the current situation.The bank is going to place ordinary shares and global depositary receipts on Russian platforms - RTS and MICEX, as well as on the over-the-counter market outside the United States and Russia. As noted in its official statement, “as part of the IPO, shares of a new issue will be offered, the volume of which will be up to 18% of the total number of ordinary voting shares.” Previously, the bank's supervisory board decided to increase the authorized capital by 20% by placing an additional issue. The bank will use the funds received to increase its own capital and expand its business. Deutsche Bank was chosen as the organizer of the IPO. The main shareholders of St. Petersburg are the bank's management, headed by Chairman of the Board Alexander Savelyev, as well as the former owners of the Multon company.
The bank, which ranks 27th in the Interfax ranking by asset size, announced plans to conduct an initial placement back in the summer. At the same time, several more Russian credit institutions announced their intentions to become public companies. But due to the crisis that broke out in the global financial market, many chose to postpone the placement of not only shares, but also bonds. Thus, last week it became known that Zenit Bank abandoned the idea of holding an IPO this year.
“The market situation is very bad now,” says Ak Bars analyst Polina Lazich. “It’s very strange that St. Petersburg decided to launch an IPO right now.” In her opinion, the situation on the markets will not fundamentally improve in November and December. The chief economist of Alfa Bank, Natalia Orlova, shares a similar opinion: “It is now very difficult for financial institutions to attract investor funds on the open market. It is possible, however, that the bank’s shareholders have already secured the support of several investors, but then the sale of shares will be more like a club deal than an IPO.”
Alfa Capital portfolio manager Johan Ekstrom is more optimistic: “From the point of view of the long-term development of the Russian banking system, the current crisis is not too dangerous for local banks. And although investors still consider bank shares to be a risky instrument, it is possible that this small bank will be able to find its investors, especially if it offers an adequate price for its securities.”
As Ms. Lazich notes, shares of Russian banks are now traded on the market with a coefficient of 1.5--2.2 (that is, market capitalization is 1.5--2.2 times the size of equity capital). According to Ms. Orlova, the bank can offer investors securities with a coefficient of 2.5. His net worth currently stands at $290 million.