WOOD Flash – Bank Pekao: state-controlled again
PZU Group and the Polish Development Fund (PFR) have agreed to acquire 32.8% of Bank Pekao S.A. (PEO) from UniCredit Group (PZU Group is to acquire 20% and PFR 12.8%). The total consideration for the 32.8% stake is PLN 10.6bn, or PLN 123/share (a 2% premium to yesterday's market close), which looks fair, in our view. The transaction price implies 2016-17E P/Es of 15-15.5x and a P/B of 1.4x, on our estimates. The completion of the transaction is subject to the relevant regulatory approvals, and the closing of the transaction is expected in 2Q17E.We appreciate PZU management’s statements on the dividend payments at Pekao and PZU. The insurer seems to be committed to providing a stream of dividends to shareholders: Pekao should maintain a payout ratio of close to 100% in the nearest future, while PZU should offer at least 50% of its 2016E net profit. In the future, the insurer is likely to offer 50-80% payout ratios (maybe higher, depending on its development plans). PZU is not planning to merge Alior (ALR) with Pekao, which should be positive for the former, in our view.
Bank Polska Kasa Opieki (the Bank) is a commercial bank providing a range of banking services, mainly in Poland. The segments of the Bank are as follows: Retail banking, which comprises all banking activities related to retail customers and small and micro companies; Private banking, which comprises all banking activities related to the affluent individual customers; Corporate and Investment banking, which comprises all banking activities related to the companies, interbank market, debt securities and other instruments; and Assets and Liabilities Management and other, which is engaged in the supervision and monitoring of fund transfers, and other activities centrally managed.
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.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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