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Baltcap: Blackstone may acquire other banks in Nordic region

BC, Tallinn, 13.09.2018.Print version
Partner at private and venture capital company Baltcap, Kristjan Kalda, said that the interest of Blackstone, U.S. investment giant about to acquire a 60% stake in Luminor for one billion euros, in the Nordic region is greater and it may acquire other banks of the region in the near future, informed LETA/BNS.

"I think that they are looking wider than only the Baltic countries, they rather want to look at the entire Nordic region," Kalda told, adding that the world's largest investment fund Blackstone may also purchase other Nordic banks in the near future.

He said that for Luminor's Baltic customers, who often are exporting companies, the problem may be the loss of a large mother bank operating in the Nordic countries, which would provide banking services to the companies both in the Baltic countries and in the target export countries. Kalda said that this is why it is believable that Blackstone is not looking only at Estonian, Latvian and Lithuanian markets.

Kalda considers the major transaction positive news for the economy in general. "This is the largest private capital transaction in the Baltic countries. This indicates that trust toward the Baltic countries and the image of the Baltics are good," Kalda said.

The Baltcap partner said that the strategy of private capital funds is always to grow the companies and exit the investment after a certain period of time. "They also have a strategy, they will build up, make it more efficient and then sell it. This is always the objective of private capital," Kalda said.

He said that Blackstone may sell Luminor to another bank or list it in the future. "This might not be the Baltic stock exchange," Kalda said.

Nordic banks Nordea and DNB will sell a 60 percent stake in Luminor, a bank operating in the Baltic states, to a consortium led by private equity funds managed by U.S. investment giant Blackstone, the banks announced on Thursday morning.

As a result of the transaction, Nordea and DNB will each hold approximately 20% of Luminor and maintain ongoing representation on Luminor's board of directors, Nordea said. Additionally, Blackstone has entered into an agreement with Nordea to purchase their remaining 20% stake over the coming years.

The agreed purchase price in the upfront sale of the approximately 36% stake divested by Nordea is 600 mln euros, valuing Luminor, which currently generates a mid-single digit normalized return on equity, at approximately 1.7 bn euros, approximately equivalent to the financial group's price-to-book value (P/BV). Blackstone is to pay approximately 1 bn euros for the 60% stake.

Luminor is under direct supervision of the European Central Bank (ECB) and has given permission for Luminor's credit institutions to merge in such a way that the bank's head office will be in   Estonia  and service is provided through branches in Latvia and Lithuania. The merger transaction will be assessed by the central bank along with the Financial Supervision Authority.

Blackstone is one of the largest investment firms in the world, managing approximately 440 bin dollars' worth of assets across the world. The company's investment funds are focused on OTC companies, real estate, government bonds, listed companies, non-investment grade bonds, real assets and secondary markets across the world.

Luminor was established as an independent Baltic bank in autumn 2017 built on the Baltic businesses of Nordea and DNB and combining the experience and knowledge from the Nordic countries. Nordea and DNB announced the plans to combine business operations in the Baltic countries in summer 2016. Before the transaction with Blackstone, DNB owned 43.5% of Luminor, with Nordea owning the rest of the stake. The bank took over over 930,000 of DNB's customers and 350,000 Nordea customers. Luminor has a total of 3,000 employees and the bank is the third largest in the Baltics. Luminor has over 15 bn euros of assets.

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