Sovcombank has determined the form and timing of the purchase of Home Bank
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In early May, Sovcombank shareholders will have to approve the process of purchasing Home Bank. To this end, Sovcombank intends to place 1 billion of its own shares as part of an additional issue. Home Bank is valued at a discount of 10 billion rubles. to capital. Experts believe that, despite the additional issue, the deal will most likely have a positive impact on the quotes of Sovcombank, which held an IPO at the end of 2023, including for retail investors.
Shareholders of Sovcombank at an extraordinary general meeting on May 2 will consider the issue of an additional issue of shares for the purchase of Home Bank, as follows from the materials of the first credit institution, published on April 1. The agenda of the meeting also included approval of the new edition of the charter of Sovcombank and the business plan for 2024–2026. The meeting will be held in absentia.
Sovcombank received regulatory approval for the purchase of Home Bank on March 29, and the deal has already been approved by the Federal Antimonopoly Service. In February, it was reported that the first stage of the deal would be the purchase of a 51% stake in Home Bank through the issue of new shares of Sovcombank in the amount of 5% of the authorized capital. At the second stage – until the end of 2024 – Sovcombank plans to acquire the remaining 49% of Home Bank’s shares, which will be paid in cash in installments over 2024–2025.
Home Bank will be consolidated in Sovcombank’s IFRS financial statements for the first quarter of 2024, which the bank plans to publish in May. Technically, the deal will be closed after registering an additional issue to pay for the purchase of Home Bank.
As the press service of Sovcombank told Kommersant, it is planned to place about 1 billion shares. As part of the transaction, Home Bank is valued at a discount of more than 10 billion rubles. to the amount of equity capital that will flow into the merged bank. According to the Interfax rating, at the end of 2023, Home Bank’s equity capital amounted to 61.03 billion rubles.
“The strategic focus of the merger will be aimed at maintaining and scaling Home Bank’s expertise in commodity lending, as well as maintaining and growing the client base and synergy of the two banks,” Sovcombank said in a statement. “The acquisition will create an even more stable and competitive bank and ensure growth customer base by 50%, retail loan portfolio by 25%, retail deposit portfolio by 20%.”
“Discount of more than 10 billion rubles. for such a financial structure as Home Bank is, in my opinion, fair. It reflects the future forecast economic benefit from the transaction, perhaps this is even an underestimate,” says Gennady Fofanov, president of the investment platform InvoiceCafe. “An additional share issue for the purposes of the transaction, taking into account the amount at which Home Bank is valued, is an additional driver of stock growth for the current moment”.
Mr. Fofanov clarifies that on April 1, Sovcombank’s quotes rose by more than 4% and “will continue to grow, taking into account its good financial performance.” On April 1, the bank disclosed its reporting under RAS, according to which in 2023 its net profit increased more than six times, exceeding 89 billion rubles. The bank’s assets increased over the year by 39.2%, to RUB 3.175 trillion. The funds of individuals, including individual entrepreneurs, placed in it amounted to 833.9 billion rubles.
According to independent financial expert Andrei Barkhota, the assessment of Home Bank and its merger “will have a moderately positive impact” on Sovcombank’s share price. “The bank is moving in strict accordance with its strategy; the proceeds from the placement of shares are directed to new inorganic development projects,” explains Mr. Barhota.
According to the managing partner of the Dmitry Donskoy financial group, Dmitry Kurbatsky, for Sovcombank, which “acts as a flagship consolidator in the market and has been closing transactions to purchase companies in the financial sector for several years now,” the addition of Home Bank “has a positive effect on the share price,” since “The size of the business, client base, and competencies are growing.”
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