Estonia, Financial Services

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Estonia: Investors subscribe to Coop shares in extent of 71% of maximum IPO volume

BC, Tallinn, 02.12.2019.Print version
During an initial public offering (IPO) of Coop Pank, some 11,000 investors subscribed to almost 33 mln of the bank's shares and as a result of the subscription, 71% of the original maximum planned IPO volume of 46 mln shares was achieved.

The supervisory board of Coop Pank approved an initial public offering of the bank of 37.9 mln euros at the price of 1.15 euros per share, Coop Pank said.

"Initially, we planned to raise during the IPO a sum that would satisfy the need for capital for three upcoming years, but in fact, we managed to raise the capital needed for two years. Now we are making the decisions on raising additional capital. We are especially pleased that 24% of the subscribers to our shares were Coop Pank customers, who subscribed for a total of 42% of the IPO volume. Coop cooperatives also subscribed to 1.4 mln shares," Margus Rink, chairman of the management board of Coop Pank, said.

Altogether 10,855 investors participated in the retail offer, having subscribed to a total of 27 million shares. On average, one investor subscribed to approximately 2,500 shares. The institutional offer attracted 24 investors, who subscribed to over six million shares.

As a result of the subscription, 71% of the original maximum planned IPO volume of 46 mln shares was achieved. The subscription of retail investors exceeded expectations, while the subscription volume of institutional investors was more modest than initially anticipated.

"The results of the institutional proposal were negatively affected by several factors. The volume of the offer, as well as the size of the company itself, seemed to many as aimed at a specific region and were too small for the investment funds of emerging markets, as well as seemingly not providing enough liquidity," Lauri Lind, representative of LHV, the financial adviser for the IPO, said.

Lind noted that throughout the offer period, there also was a negative news background on the subject of money laundering in the banking sector of the Baltic states. "The IPO was also influenced by the fact that over the past five years – and in many cases longer – the shares of banks in both the Western as well as Central and Eastern European regions have been trading at almost the lowest level. The reform of the Estonian pension system and the resulting uncertainty also played their role. At the same time, the retail offer showed good results, which demonstrates that local investors – including Coop Pank customers – have great confidence in the bank," he added.

The supervisory board of Coop Pank decided that all subscribers will receive the shares in the desired amount. Coop Pank issues 27 mln new shares, and its equity is to increase by 31 mln euros. This sum will be used to implement the bank's growth strategy.

The share price was 1.15 euros, which is the lower offer limit. The reserved amount of 0.15 cents per share was released for the investors who subscribed at the rate of 1.3 euros.

The current minority shareholders of AS Inbank, Luciano Orsero and Roberto de Silvestri will sell the total of approximatel 5.8 mln shares. The largest private shareholder of Coop Pank, Andres Sonn, decided to not to sell his shares during the IPO.

Most investors, that is 50%, used LHV to subscribe for shares. Altogether 31% of investors subscribed for shares using Swedbank, and 18% using SEB. In other Baltic countries, 74 investors subscribed for shares, expressing their wish to purchase 457,000 shares.

Coop Pank shares will be transferred to the securities accounts of investors presumably on Dec. 4, 2019. According to the plan, the first day of trading of the shares on the Nasdaq Tallinn stock exchange is Dec. 9, 2019.

The subscription period started at 10 a.m. on Nov. 18 and ended at 3:30 p.m. on Nov. 29. During the IPO, Coop Pank issued up to 32.2 mln new shares and certain shareholders of the bank offered up to 8.1 mln existing shares of the bank.

The total number of shares of the IPO may have increased by up to 6 mln existing shares to 46.3 mln shares as a result of the use of the greenshoe option by the organizer of the IPO, that is LHV Pank.

Based on Estonian capital, Coop Pank is one of five universal banks operating in Estonia. Coop Pank has 15 bank offices and 28 banking points across Estonia. The number of daily banking customers at Coop Pank amounted to 58,300 as at the end of October. The main shareholder of the bank is the domestic retail chain Coop Eesti, which runs 330 stores across Estonia and has approximately 600,000 loyal clients.

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