WOOD Flash – BGEO: demerger details – a wrap-up of the process and our thoughts
BGEO has announced the details of the upcoming demerger. The group will vote on the demerger and related processes at its upcoming annunal general meeting on 30 April. If approved by the shareholders, the group is targeting to complete the demerger process by 29 May. We note that the group is seeking a supermajority (75% or over) for the approval of the process. In principle, we are positive on the demerger process, as we believe a simpler structure and increased optionality would benefit investors. However, clearly, there are risks to be aware of, such as: potentially lower liquidity on both shares post the demerger, and medium-term overhang pressure on Bank of Georgia’s shares as Georgia Capital reduces its stake over time. We have a BUY rating on the group, with a GBP 40.8/share price target (PT), which offers 16% upside. The group is trading at 1.5x P/BV and 9.6x P/E for 2018E, on our estimates.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
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