PPF plans London IPO of its Home Credit subsidiary

By bne IntelliNews May 30, 2011

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PPF Group, the investment vehicle of Czech tycoon Petr Kellner, is in the preliminary stages of planning an international IPO of its subsidiary holding Home Credit B.V. (Netherlands), according to reports in the Russian press.

Home Credit B.V. hosts the group holding companies of its consumer finance business throughout Central and Eastern Europe, namely the Czech Republic, Slovakia, the Russian Federation, Kazakhstan and Belarus.

Russian daily Kommersant cited unnamed sources close to the bank as saying the shareholders are ready to conduct an IPO by selling part of existing shares (20-30%, the sources specify) in the autumn of 2011. According to bne's information, PPF has hired Deutsche Bank, Citigroup, Merrill Lynch and JP Morgan to lead manage the IPO in London, and the deal will come sooner than the autumn.

PPF told bne that it doesn't comment on market rumours and would only comment on a completed transaction, but left the door open to the possibility of some sort of deal. "The facts and the assumptions in the [Kommersant] article are wrong," said Milan Tománek, Head of PPF Group Communications in Prague.

According to bne's understanding, PPF is looking for the IPO to value the firm at 3.5x to 4.0x book value, which would translate into a valuation of around €3.5bn. "Given Home Credit & Finance Bank's leadership (27% in consumer lending) in a highly profitable segment, its multiples could be higher than those at the recent placement of Nomos Bank (price/book value of 1.5x), though pricing will clearly depend on the placement parameters and market sentiment," says Ainur Medeubayeva of Troika Dialog.

PPF also owns 28% in Nomos Bank, which carried out Russia's first ever IPO by a commercial bank in April.

Petr Kellner's Home Credit Group has been enormously successful, especially its Home Credit & Finance subsidiary in Russia. A corollary of this is that it made Home Credit & Finance a target of Russian state-controlled VTB Group, which was in talks with its PPF owners in November 2010 about buying it before those negotiations collapsed over price.

The problem this left for Kellner is that he still didn't have the funds required to expand Home Credit into the lucrative new markets he has identified in Asia and North Africa, such as India, Indonesia, China and Egypt. Thus the decision to IPO the European segment to fund the growth in the new emerging markets.

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