Hungary Raises $265 Million in Sale of OTP Bank Stake

  • Hungary sold 5 percent stake in nation's largest lender
  • Average price said to be 5,322 forint at 6.1 percent discount

Hungary’s government raised about 75 billion forint ($265 million) selling a 5 percent stake in OTP Bank Nyrt. at an auction on Thursday, four years after it acquired shares in the country’s largest lender in a takeover of privately managed pension assets.

The state-asset manager MNV Zrt. sold more than 14 million shares, it said in a statement on its website. The average price was 5,322 forint per share, a 6.1 percent discount from Wednesday’s closing price, said two people with knowledge of the auction who asked not to be named as the details aren’t public. Trading in the shares was halted on Thursday for the auction, which was led by the Equilor Befektetesi Zrt. brokerage.

OTP Bank’s shares have rallied 49 percent this year, lifted by the government’s pledge to cut Europe’s highest bank tax beginning in 2016. The cabinet, which has focused on keeping the budget deficit within European Union rules since Viktor Orban became prime minister in 2010, will channel the proceeds to a state fund that invests mostly in sports, tourism and state administration infrastructure.

"We wanted to activate a state holding that has been dormant until now," Janos Lazar, the minister in charge of the Prime Minister’s Office told reporters in Budapest. The government will spend the proceeds on investments and not to cover operating costs, he said.

Hungary sold its stake in the company after having gained ownership in OTP and other companies with the takeover of 3 trillion forint ($10.6 billion) in assets from private pension funds in 2011. The surge has taken the stock to levels last seen in 2011, which means the state would break even on the ownership when taking dividends into consideration, according to Norbert Harcsa, a trader at Ipopema Securities.

Mol Nyrt., Hungary’s largest refiner, fell 6 percent in a day after an unidentified owner sold 4 percent in that company in June 2014. Lazar said the government wasn’t planning to sell a 25 percent stake in drugmaker Gedeon Richter Nyrt.

A total of 13 bourse members, including OTP Bank itself, applied to take part in the auction, according to a statement by Equilor on the Budapest Stock Exchange website. Equilor received bids for almost twice the offered amount, OTP said in a statement on the bourse’s website.

"If OTP is eligible to take part in the auction, it may be worth buying its own shares," Ipopema’s Harcsa said before the auction. "That may discourage investors betting on declines in the stock and help gains in the medium term to near 6,800 forint."

(A previous version of this story corrected the date of an earlier Mol transaction.)

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