Sovcombank Group plans to acquire HKF-Bank and its insurance company

Sovcombank Group plans to acquire HKF-Bank and its insurance company. The deal will be partially paid for by an additional issue of Sovcombank shares, and its completion is expected next year. Documents are planned to be submitted to the regulatory authorities – the Central Bank and the Federal Antimonopoly Service – next week. From a legal point of view, the deal seems justified, since both banks are on the SDN list.

On Friday, February 16, Sovcombank announced that it had reached an agreement with the shareholders of HKF Bank on its purchase. The bank is being acquired at a “significant discount” – less than 80% of the fair value of capital, said Sergei Khotimsky, First Deputy Chairman of the Board of Sovcombank. Moreover, part of the amount is 15 billion rubles. “with a little” – will be immediately paid for with Sovcombank shares. The other part will be paid for in cash in stages over 2024–2025. Taking into account the fact that when disclosing the essential fact of the purchase, Sovcombank indicated that 51% of the shares would be paid for by issuing new shares, the total amount of the transaction can be estimated at almost 30 billion rubles.

This amount is comparable to the amount paid to PPF Group by the current owners of HKF Bank in 2022 (see “Kommersant” dated May 17, 2022). The Czech group reported that the payment for the first part of the transaction amounted to 26.4 billion rubles. The second part was estimated at 16.4 billion rubles, but could be reduced by 11.1 billion rubles. Thus, the total amount could be 42.8 billion rubles. or 37.5 billion rubles. One of the buyers, Ivan Tyryshkin, called the transaction amount “market.” However, already two years ago, a number of Kommersant’s interlocutors called Mr. Tyryshkin close to the owners of Sovcombank, considering him a nominal buyer.

The announcement of the M&A transaction occurred three months after the IPO of Sovcombank (see “Kommersant” dated December 15, 2023). “Our IPO has probably allowed us to make significant progress in these discussions (on the acquisition of HKF Bank.— “Kommersant”), because it’s one thing to try to negotiate without spending capital, that is, by paying with your own non-public shares, and it’s completely different when the shares have an objective stock exchange valuation,” Sergei Khotimsky told reporters. The key parameters of the deal were achieved this year, he noted. According to one investment consultant, paying in shares in M&A deals in developed markets is a very common story.

Mr. Khotimsky described the acquired bank as “a significant player that will dramatically increase the competitiveness of the merged bank.”

As a result of the transaction, the number of clients will increase by 1.5 times, and after integration the bank will become a leader in commodity lending (POS segment).

In past transactions as part of bank integrations, Sovcombank offered clients to switch to its installment product (Halva card). It is still unclear whether clients who have HKF Bank credit cards will be transferred to an installment card; it is only planned to begin communication with clients in the second quarter of 2024, Mr. Khotimsky noted.

As a result, according to the assessment of the bank’s IR director Andrei Osnos, from the acquisition of the portfolio of loans and deposits of HCF Bank, Sovcombank will save “several billion rubles” in expenses that could have been spent on the corresponding attraction. At the same time, of the retail loan offers, HKF Bank only has credit cards left. Earlier in February 2023, Sovcombank had already purchased the installment portfolio of HKF Bank, receiving more than 1 million new clients from it, and the transaction amount could have been about 11 billion rubles. (see “Kommersant” dated April 10, 2023).

In addition to the bank, the insurance company Home Credit Insurance is also being acquired; other assets were not included in the transaction. The HKF Bank group also includes the companies Home Tech, Always Yes, and Skolkovo Gate. Legally, the deal is planned to be completed by the end of March; the process of preparing the integration of the banks will begin in April. According to Mr. Khotimsky’s expectations, everything could be completed in the first half of 2024. According to previous experience in M&A, banks can switch to one license within 9–12 months; this time there may be a similar scenario. Mr. Khotimsky does not rule out further M&A transactions in segments, including insurance, but transactions to purchase banks are “unlikely.”

Olga Sherunkova