Latvia's Citadele to IPO in Riga and London

By bne IntelliNews October 15, 2015

bne IntelliNews -


Latvia's Citadele bank will launch an initial public offering (IPO) on the Riga and London stock exchanges, looking to raise up to €115mn, Citadele announced on October 15.

The IPO is only the second public offering of a Latvian company since 2004, when SAF Tehnika, a communications technology company, carried out an IPO. It is a boost for the Latvian capital market, which has attracted very few IPOs in the past few years because companies would rather go for bank financing.

“IPOs in Latvia have been so rare, because the banking sector finances most of the businesses in Latvia. Usually companies have not been keen to offer their shares to the public since for many of them it is easier to receive financing from the banks,” Janis Springis of Swedbank’s Large Corporate and Financial Institutions unit in Riga told bne IntelliNews.

“Citadele bank’s offering is an opportunity for investors who want to gain exposure to the Latvian economy,” Springis said.

According to the bank, the IPO demonstrates how the economies of the Baltic states are leaving the global financial crisis behind for good. 

“In the context of the Baltics’ proven economic recovery, we feel that the time is right to launch an IPO to support our next stage of strategic growth. Our ambition is to become the “go-to” bank in providing a premium range of banking products and services for households and small-to-medium sized businesses, who are currently underserved in our target markets,” Citadele’s Guntis Belavskis CEO said in a statement.

The Citadele’s IPO will comprise an issuance of new stock to raise up to €115mn, with the proceeds slated to help the bank “pursue future growth in Latvia and the Baltics,” the bank said in a statement. The proceeds will also be used to repay €34.7mn of the subordinated debt currently held by the Latvian Privatisation Agency, the bank said. 

The IPO, for which Citigroup is the global co-ordinator, will be divided in two tranches, one for institutional investors and the other for retail investors, although the proportions between the tranches have not been made clear yet. The shares floated in London will be issued as global depositary receipts.

Citadele was created in 2010 from the non-toxic assets of the collapsed Parex bank. It remained under state control until April, when the state's 75% stake was sold to a group of investors led by US private investment company Ripplewood Advisers for €74mn. The European Bank for Reconstruction and Development retains a 25% stake.

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