Nomos Bank London IPO sees listing record for private Russian bank
Nomos Bank has successfully completed its IPO, raising $718 million and making it the largest IPO of a privately owned Russian bank.
Nomos placed 22% of its shares in London at $35 per share and $17.50 per GDR, with reports demand for the issue was three times availability. The offering included 5.5 billion roubles worth of new shares and existing shares held by minority shareholder Roman Korbachka. The shares will be included on the LSE quotation list as of April 27. Mark Rubinstein, Head of Research at Metropol, said the float indicated the degree of investor interest in Russian banks.“The successful placement underscores the attractiveness of the Russian financial sector. GDRs were priced at USD 17.5 each. The price per share implies a 2011E P/BV of 1.5x, a 15% premium to the median for Russian traded banks, according our estimates.” Nomos Bank was valued at $3.2 billion following the IPO, with president, Dmitry Sokolov saying the funds raised would be used for development. “Our strategy is focused on continuous strengthening of the banking capital and market position. The attracted funds will be used in appropriation with banks’ core strategic objectives which, above all encompasses potential acquisitions”UniCredit Securities CFA Rustam Botashev, believes the bank may even look at expanding the offer.“The valuation implies a market capitalization of around $3.2 billion with the bank valued at roughly 1.5X 2011E. If an over allotment of shares is exercised, the free float would rise to 25%, increasing the size of the offering to more than $800 million. We believe the news is positive for the Russian banking sector and Russian issuers in general, some of which were having trouble offering its shares this year. We see a successful IPO by a private Russian bank as a sign that investors are interested in the sector and believe it might create positive sentiment around Russian banking stocks.”Troika Dialog analysts Andrew Keeley and Olga Veselova, say investors have been attracted to Nomos Bank’s operations and its relatively large free float.“The sale implies a post-money 2011E P/BV of 1.4, which looks about fair relative to other mid-cap names such as Vozrozhdenie Bank and Bank of St Petersburg, which trade at a 2011E P/BV of 1.3-1.5. Nomos Bank has advantages and drawbacks relative to these names. It has a limited capital markets track record but will be the only mid-cap name with a London-listed GDR, and it also looks to have a decent sized free float. It is currently a more profitable bank than either peer but has a loan book that is heavily tilted toward corporate business (over 89% of the book, even after the consolidation of the more retail-focused Khanty-Mansiisk Bank), and with almost half of all loans to construction/real estate and financial companies. It has posted phenomenally high recent growth (even excluding Khanty-Mansiisk Bank) and has been actively selling and writing off loans, helping to keep a very low NPL ratio.”