OLB could go public as early as this summer. The institute has presented record figures – and promises even more.
(Photo: dpa)
Frankfurt After a record profit, the Oldenburgische Landesbank (OLB) is heading for the stock exchange. According to financial circles, going on the floor is planned for the first half of 2023. The exact timing depends on the financial markets. An official announcement in May is possible, with the actual IPO taking place in June, according to several people familiar with the matter. If the market environment is already optimal after Easter, the deal could also be brought forward.
OLB itself did not want to comment on the schedule for the IPO. The decision about a share debut is in the hands of the owners, said Stefan Barth, CEO of OLB, at a conference call on the annual results on Wednesday. “We’ve done our homework and are delivering key figures that are ready for the stock market,” said Barth. In the 2022 financial year, OLB increased its net profit by 71.5 percent to EUR 197.7 million and thus achieved a record result.
The financial investor Apollo, the US pension fund Teacher Retirement Systems of Texas and the British investor Grovepoint acquired OLB in 2017 for a good 300 million euros and have since expanded with acquisitions.
OLB IPO: around 1.7 billion euros valuation expected
In an IPO, OLB could be valued at around 1.7 billion euros, insiders say. About a third of the shares – all from old stocks – could be sold. A capital increase, the proceeds of which would go to the bank, is not planned.
When evaluating OLB, the Austrian bank Bawag is used as a benchmark. Bawag is currently trading at 1.2 times its equity on the stock exchange. At the end of 2021, OLB had a book value of EUR 1.5 billion, but this does not include the equity of around EUR 300 million from the recently acquired Degussa. Including Degussa, the pro forma book value is around 1.8 billion.
When going public, investors always demand discounts for the valuation of companies that are already listed, in this case it could be up to 15 percent discount. A valuation of 1.7 to 1.8 billion euros for the OLB is realistic, possibly even more, the insiders said. Apollo and OLB did not comment on the valuation.
More ambitious goals: Between 14 and 16 percent return on equity
The bank is promising potential investors even more ambitious goals: After the institute achieved a return on equity of 14.7 percent last year, it wants to achieve between 14 and 16 percent in the future. Previously, the target range was one percentage point lower.
The cost-income ratio, an important efficiency indicator for banks, is to fall below 40 percent. So the bank wants to spend less than 40 cents to earn one euro. Last year, the company improved its cost-to-income ratio to almost 42 percent.
OLB, which is primarily active in construction financing and corporate customer business, intends to continue on its growth path. “The market for mortgage lending has become more difficult in Germany,” admitted CFO Rainer Polster. But they want to compensate for that with the business in the Netherlands.
The institute is also optimistic for the company side. According to Barth, OLB concentrates on niches in which business is not damaged despite adverse market conditions. This includes, for example, the financing of wind farms and football transfers.
More: Deposits in demand: why OLB is buying Degussa Bank