Latvia's Citadele Banka Plans IPO Seeking 115 Million Euro

  • Citadele plans IPO in 4Q for debt repayment, lending
  • Public offering to be held on Riga and London stock exchanges

Citadele Banka AS, Latvia’s fifth-biggest bank by deposits, plans an initial public offering by the end of 2015 to fund expansion and repay debt, Chief Executive Officer Guntis Belavskis said.

The Latvian lender, which counts a former U.S. Federal Reserve chairman and one of Egypt’s richest people among its investors, intends to raise as much as 115 million euros ($131 million) in sales of global depositary receipts on the London Stock Exchange and in class-B ordinary shares on the Riga stock exchange.

“If everything will be successful then we will complete this in the fourth quarter,” Belavskis said by phone after the company announced its intention for the IPO in a regulatory statement on Thursday.

The expansion plans mark a turnaround for Citadele, which was created following the 2008 state rescue of Parex Banka AS in a crisis that Latvia survived thanks to a bailout from the European Commission and the International Monetary Fund. Timothy Collins, the CEO of Ripplewood Advisors LLC who led a group of investors that bought 75 percent of Citadele last year, indicated at the time that the bank may raise capital via an IPO and would consider expansion through acquisitions in Latvia and the Baltic states.

Egyptian Billionaire

“An IPO is a logical move from the new shareholders of the bank,” Arvydas Jacikevicius, a broker at SEB AB’s Lithuanian unit, said by e-mail. “This is very positive news for the Baltic capital markets. It may become an ice breaker for the Baltic stock exchanges starving for new companies coming to the market.”

The Collins-led group of investors includes former Federal Reserve Chairman Paul Volcker, Egyptian billionaire Nassef Sawiris, and former head of the World Bank James Wolfensohn. The European Bank for Reconstruction and Development holds 25 percent in the Latvian lender.

Proceeds from the IPO will be used for “small and medium-sized business development, private person lending, mortgage and consumer lending” in Latvia and the Baltic states, Belavskis said. Citadele also plans to repay 34.7 million euros of subordinated debt to the Latvian Privatization Agency.

Citigroup Inc. and EFG Hermes are joint book runners for the sale, with Raiffeisen Bank International AG, Mediobanca SpA and LHV Pank AS acting as the co-lead managers, according to the filing.

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