The council of the Estonian capital-based Coop Pank approved the bank's initial public offering (IPO) of €37.9 million at the price of €1.15 per share. In all, some 11,000 investors subscribed to nearly 33 million shares of Coop Pank during the IPO, the exchange trading of which is planned to begin on Dec. 9.
10,855 investors participated in the retail offer, subscribing to a total of 27 million shares, according to a bank press release. On average, one investor subscribed to approximately 2,500 shares. The institutional offer attracted 24 investors, who subscribed to over 6 million shares.
As a result, 71 percent of the original maximum planned IPO volume of 46 million shares was achieved. The subscription of retail investors exceeded expectations, while the subscription volume of institutional investors was more modest than initially anticipated.
The bank's council decided that all subscribers will receive shares in their desired amounts. Coop Pank is issuing 27 million new shares, and its equity is to increase by €31 million. This sum will be used to implement the bank's growth strategy.
The share price was €1.15, or the lower offer limit. The reserved amount of €0.15 per share was released for investors who subscribed at the rate of €1.30 per share.
Current minority shareholders AS Inbank, Luciano Orsero and Roberto de Silvestri will be selling a total of approximately 5.8 million shares. Andres Sonn, the largest private shareholder of Coop Pank, decided not to sell his shares during the IPO.
Half of all investors used LHV to subscribe to shares. Another 31 percent of investors subscribed via Swedbank, and 18 percent via SEB. In Latvia and Lithuania, a total of 74 investors subscribed for shares, indicating their wish to purchase a total of 457,000 shares.
"The offer has shown that retail investors have great confidence in us," Coop Pank CEO Margus Rink said. "On behalf of Coop Pank employees, I guarantee that we will make every effort to fulfill the promises given to shareholders, and will fully implement the growth strategy in the coming years. We initially planned to raise a sum that would satisfy the need for capital for three years to come during the IPO, but we in fact managed to raise the capital needed for two years. Now we will make decisions regarding the raising of additional capital."
Rink noted that the bank was especially pleased to see that 24 percent of subscribers to its shares were Coop Pank customers, who subscribed for a total of 42 percent of the IPO volume. Coop cooperatives also subscribed to 1.4 million shares.
Several factors negatively affected IPO
"The results of the institutional proposal were negatively affected by several factors," said Lauri Lind, representative of LHV, who acted as financial adviser for the IPO. "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. Throughout the offer period, there was also 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, however, the retail offer showed good results, demonstrating that local investors, including Coop Pank customers, have great confidence in the bank, Lind added.
Coop Pank shares are expected to be transferred to investors' securities accounts on Dec. 4. According to the plan, trading of the shares on the Nasdaq Tallinn Stock Exchange (TSE) is expected to begin on Dec. 9, 2019.
The Estonian capital-based Coop Pank is one of five universal banks operating in Estonia. It has 15 branch offices and 28 banking points throughout the country, and over 58,000 clients use the bank for their daily banking needs.
The strategic shareholder of the bank is domestic retail chain Coop Eesti, which consists of 330 stores and approximately 600,000 customers.
Editor: Aili Vahtla