Sovcombank is going to hold an IPO again

Sovcombank may hold an IPO before the end of the year. The credit institution planned to become public more than three years ago, but the project was postponed for various reasons. There is currently a shortage of banking shares on the market, but experts believe that entering with a large supply volume is “quite risky.” The main buyers are retail investors, whose demand potential is low.

The Supervisory Board of Sovcombank submitted for consideration to the general meeting of shareholders the issues of placing an additional issue of shares and filing an application for listing. Typically, such actions are associated with a public offering of securities (IPO). The bank’s plans to enter an IPO were confirmed by a Kommersant source on the market, clarifying that the placement could take place in December. According to another Kommersant interlocutor, Sovcombank shareholders believe that it “should be public,” everything is ready for an IPO and “now is the right moment.”

Indeed, the bank took the same steps at the beginning of 2020 (see “Kommersant” dated February 21, 2020). The press service of the credit institution clarified that it has been ready for an IPO “for many years” and since 2020 has supported the registration of shares, which it can place at any time. In April 2020, the Central Bank registered an additional issue of the bank, placed by open subscription (5 billion shares), which was extended until April 2022 (see “Kommersant” dated February 1, 2021). “According to the requirements of the regulator and the Moscow Exchange, if shares are not placed within three years, the issue must be resumed, which is what is happening now,” the bank clarified.

This year, only Genetico has held an IPO on the Russian market (worth about 180 million rubles). There was also a direct listing on the Moscow Exchange of the SmartTechGroup company (the main asset of the Karmani multifunctional complex, the volume of attraction was almost 1 billion rubles, see “Kommersant” dated July 4).

Previously, they were talking about Sovcombank’s plans to place about 3% of shares for about 10 billion rubles, the bank valued itself at 1.5x capital, or 350 billion rubles, which “in the current conditions looks quite expensive,” says a stock market expert “ BCS World of Investments” Valery Emelyanov: “Sberbank is trading at a little more than 1x capital. True, Sovcombank’s profitability is higher, so they may well go for that price.” Now issuers usually offer the market a small share of shares – 5-15%, notes FG Finam analyst Leonid Delitsyn. But in the case of Sovcombank, this is already tens of billions of rubles, he emphasizes.

Despite the positive situation on the stock market – the Moscow Exchange index remains above 3100 points, having added over 40% since the beginning of the year – it is quite difficult to attract large volumes through IPOs. “Demand now comes mainly from individuals and can amount to several billion rubles, but even 10 billion rubles. placement is not an easy task in the current market,” believes Dmitry Alexandrov, managing director of Ivolga Capital. However, investors “are looking forward to the IPO of Astra Group of Companies, as there is a demand for promising and financially stable companies,” notes Artem Outlev, an analyst at Ingosstrakh-Investments Management Company.

Sovcombank shares are also interesting because there are not so many public banks, market participants add.

“All investors hold Sberbank, retail investors are also willing to buy BSP, VTB regularly shoots,” explains Mr. Emelyanov. “But given the modest share of the placement, it is unlikely that institutions will come for Sovcombank shares.”

The raised funds, experts believe, can be used to expand the bank. Sovcombank has already allowed the acquisition of other businesses or banks. “And it would not be surprising if the money raised is spent on this, and not the profit of the bank itself. This approach reduces the risk of making a mistake with a future transaction,” notes Valery Emelyanov. “In addition, the placement will show how much the bank’s business is really worth. This is important before any merger or acquisition.”

Ksenia Kulikova, Olga Sherunkova