Bank shares are significantly overvalued

The organizer of the IPO of the Moscow Credit Bank (MCB), VTB Capital, called the placement price of shares in the range of 0.8-1 capital adequate. Thus, MKB was valued more expensive than the largest Russian public player - Sberbank (traded at 0.8 capital). Such a high valuation confirms the non-market nature of the IPO and the existence of agreements with anchor investors who are ready to overpay for MKB, market participants are confident.

Photo: Yuri Martyanov, Kommersant / buy photo

The sole organizer of the MKB IPO, VTB Capital, prepared a review of the bank in anticipation of the placement of its shares on the Moscow Exchange. According to him, VTB Capital considers an adequate valuation of MKB shares at the level of 3.2-4 rubles. per paper (0.8-1 capital). The bank plans to place at least 10% of shares in the second half of July. Assessing the bank's current performance, VTB Capital analysts note that the price of its shares as of mid-2015 was 2.33-3.25 rubles. per share, that is, at the level of 0.56-0.79 capital. “However, investors are often willing to pay a premium to own shares of a niche player that has a high H1 ratio (13.44% as of June 1), consistently outperforms competitors, and also has lower risks,” the review states.

At the end of the first quarter of 2015, MKB ranked 15th in terms of assets. The main owner of the bank, Roman Avdeev, owns 86.2% of its shares, another 6.9% belongs to the EBRD, 2.7% to the IFC, and another 4.2% is owned by the Cyprus RBOF Holding Company. According to the review, in 2009-2014, the bank's assets grew more than five times, and revenue from core activities and profits grew by six and seven times. According to IFRS MKB, in 2014 its net profit amounted to 5.6 billion rubles.

According to market participants, VTB Capital's assessment of MKB shares can hardly be considered market value. “Of course, for objective market investors, the proposed price is high, since the profitability of the banking sector is falling, and the risks of growing bad debt have not been fully realized,” notes Raiffeisenbank analyst Denis Poryvay. “Even Sberbank, with all its advantages, is now trading with a coefficient of 0.8 capital ". Private public banks, for example, Vozrozhdenie and St. Petersburg are traded at 0.4 and 0.3 capital ratios, respectively.

Earlier, Kommersant reported that a number of non-state pension funds could become the acquirers of 10% of the shares of MKB (see Kommersant of May 29). “The announced price confirms the non-market nature of the planned transaction,” points out the head of NPF “Participation” Sergei Zytsar. “Most likely, there are agreements on the unofficial side of the transaction that make it interesting for funds.” Promsvyazbank recently applied a similar scheme. In April-May, he sold his existing stake on the market - 20% with a coefficient of 1 capital. The shares were purchased by pension funds, and the ratio of the high price to the illiquidity of the acquired package even then raised questions among market participants (see Kommersant on May 5).

Unlike Promsvyazbank, whose shares were listed on the stock exchange even before the transactions, MKB shares are not yet present there. Formally, this will happen as part of an IPO. However, by law, pension funds are not allowed to buy shares in an initial public offering. This means that MKB will need a friendly investor who is ready to buy them at an inflated price for subsequent resale to NPFs, Kommersant’s interlocutors indicate.

For NPFs, unlike market investors, buying shares at an inflated price is not critical. “NSF shareholders do not risk their money, and therefore, by and large, the price level is secondary for them,” explains Denis Poryvai. “At the same time, in the case of non-market players, there is no risk of a negative revaluation of their investments.” According to Sergei Zytsar, the NPF bank is an ideal investor, since, on the one hand, it now has excess liquidity due to the recent unfreezing of pension savings, and on the other hand, the Central Bank has fewer questions for it than for any other investor in terms of transparency.

Yulia Lokshina

ICD did not hit the market