Georgia’s TBC Bank gets London premium listing

Georgia’s TBC Bank gets London premium listing
TBC was founded with $500 in capital in 1992.
By bne IntelliNews August 11, 2016

Georgia's second largest bank by assets, TBC Bank, has placed 49,159,880 premium shares on London Stock Exchange (LSE) after the completion of its tender offer on August 4, the company announced on August 10. The ticker for the new listing is TBCG.I.N.

TBC Bank has thus become the third Georgian company to secure a premium listing status on the British bourse, following the country's largest lender Bank of Georgia Holdings (BGEO) and its healthcare arm Georgia Healthcare Group listings in 2012 and 2015 respectively. The premium listing is expected to help TBC Bank close the gap with its main rival BGEO.

TBC Bank's shares were admitted as global depositary receipts (GDR) on the LSE in June 2014, but the lender has been eyeing a premium listing in order to broaden the range of investors that can trade its shares. Under its previous listing, some 70% of TBC Bank's shares were owned by LSE investors and the lender expressed confidence that the latter would swap their GDRs for premium shares following the change.

TBC Bank had a market share of 28% in loans and 27.3% in non-banking deposits at the end of March, according to data from the National Bank of Georgia (NBG). The bank is a market leader in retail lending, particularly as it pertains to small and medium-sized entreprises (SMEs). However, Bank of Georgia is working to challenge TBC Bank's position in SME lending, having recently secured a €23mn loan from the Black Sea Trade and Development Bank (BSTDB) for this purpose.

Unlike Bank of Georgia, which is the successor of one of the oldest banks in the country, TBC Bank was founded from scratch "with $500 in capital" in 1992, as Mamuka Khazaradze, co-founder and chairman, likes to recount.

Khazaradze and the other co-founder of the bank, Badri Japaridze, continue to hold a 22% stake in the bank, while 69.9% of the shares are listed on the LSE. The bank is also owned in part by the European Bank for Reconstruction and Development (12.4% share), the International Finance Corporation (6.2%) and the Dutch development bank FMO (4.4%).

TBC Bank is due to announce its second-quarter results on August 12. The lender posted an encouraging 29% y/y increase in profit to GEL58.7mn (€23.5mn) in the first three months of 2016. Assets grew 11% y/y to GEL6.65bn in January-June, helped by a 7% y/y increase in loans and a 6% y/y growth in deposits to GEL4.5bn and GEL3.93bn, respectively.

The bank's sustained growth in recent years had not seen itself reflected in its GDR share price, which slumped from a high of $16.5 per share in September 2014 to a low of $8.27 in October 2015, only to slowly inch upwards to $13 since. Analysts blame TBC Bank's performance on the stock exchange on declining confidence in emerging markets and the poor timing of its listing, as well as the fact that the shares were not settled through Crest, LSE's settlement system, and were therefore hard to find.

According to VTB Capital, the relatively low market value now could translate into a good investment opportunity, and TBC Bank is becoming more attractive than BGEO.