Slovenia to hold IPO of largest lender NLB

Slovenia to hold IPO of largest lender NLB
By bne IntelliNews May 13, 2016

Slovenian Sovereign Holding (SSH) said on May 12 that an initial public offering has been assessed as the most appropriate method for the upcoming privatisation of the country's largest state-owned lender Nova Ljubljanska Banka (NLB), based on the findings of the feasibility study from its financial adviser Deutsche Bank.

SSH announced on December 3 that NLB’s privatisation will be launched in 2016, but it expects NLB will be challenging to offload. NLB, which was nationalised in 2013, is the largest of around 20 companies SSH plans to sell off in 2016. Under the strategy, the state should keep 25% plus one share in the bank, a SSH spokesperson confirmed to bne IntelliNews.

SSH said on May 12 that as part of the IPO, NLB shares will be listed on the Ljubljana Stock Exchange (LJSE) with a parallel listing on an international stock exchange.

“The listing of NLB shares on LJSE will positively impact the development of the domestic capital market while the parallel listing on a recognised international stock exchange, which is significantly more liquid, will allow NLB to attract a wider international investor base, facilitate direct benchmarking with relevant peers, benefit from broader research analyst coverage and achieve other advantages of a major international stock exchange,” SSH said.

The press release adds that Deutsche Bank has also submitted recommendations in relation to NLB's corporate governance, future management remuneration policy and other proposals for appropriate preparation for the NLB sale. As a result, an investor friendly governance framework will be proposed by SSH for NLB to achieve a successful privatisation and to increase NLB's attractiveness for international investors as part of the IPO process.

The supervisory board of SSH appointed Deutsche Bank as financial adviser on the upcoming sale of the NLB at a meeting held on March 30, according to SSH’s press release published on its website on March 31.

The IPO is not expected to be launched before autumn 2016, and it will take into consideration several factors, including market conditions.

“The preparatory activities for the launch of the sale process have started. SSH's goal is, together with the financial advisor, and in cooperation with NLB, to implement the sale process as effectively as possible by the end of 2017, in line with the commitment given by the Republic of Slovenia to the European Commission,” SSH said.

The Slovenian government launched a €4.8bn bailout in 2013 when its largest banks were hit by the eurozone crisis, and the government is now looking to exit its holdings in the sector. NLB is due to be sold by the end of 2017 under an agreement between Slovenia and the European Commission.

NLB Group, which includes NLB, increased its net profit to €91.9mn in 2015, up 47% compared to 2014, the company announced on March 7 in its latest annual unaudited financial report. NLB, with its stand-alone result of €43.9mn, contributed the most to the NLB Group's result.

Moody’s Investor Service affirmed the long-term deposit ratings of three Slovenian lenders including NLB at B2 on February 10.

Fitch Ratings upgraded NLB’s long-term issuer default rating to BB- from 'B+, on May 12.

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