East Capital Financials Investors AB (publ) AGM East Capital Private Equity, 2017-06-20
Main events of 2016 Divestment of several • After attempts to revive the business in the new regulatory portfolio holdings environment failed, Morgan and Stout was sold back to the founding shareholder in February. • In April the CBR decided to revoke the license of FIA Bank due to insufficient capital. • In April, a partial divestment in Locko Bank reduced the fund's holding to 9.99%. The fund received approx. EUR 1.9m for the shares at valuation 1xBV. On the back of record results in 2015, Locko Bank paid close to • EUR 900k in dividends to ECFF. • In July, the fund sold its shares in AKI Bank to one of the minority shareholders in the bank for EUR 4.9mn. • In November the fund paid EUR 5.7mn in dividends to its direct investors. 2
Key events after the year end Divestment process • In February, the CBR met with Asian Pacific Bank shareholders to for APB launched discuss solutions for the bank’s impending capital adequacy issues, caused by the bankruptcy of M2M Private Bank, a fully owned Terms agreed for subsidiary of APB. Pivdennyi exit • The CBR required APB to provision against the exposures to M2M but granted the bank a 12 month term to comply and requested ECFI distribution shareholders to form a plan for capital support by year end. proposed In April, APB shareholders hired an advisor to run a competitive • bidding process to sell the bank or bring in a new shareholder. • In April, ECFF agreed indicative terms for the buyout of Pivdennyi shares. The board of ECFI proposed a EUR 3.2mn cash distribution via • share split/redemption mechanism. This implies a cash distribution of 6 euros per share. 3
Portfolio Overview May 31, 2017 EURm Country Ownership stake % of Portfolio Asian-Pacific Bank Russia 17.91% 30.1% Locko Bank Russia 10.0% 50.1% Pivdennyi Bank Ukraine 9.98% 15.3% Total Investments 95.5% Cash 4.5% Total portfolio 100% 4
Performance - Ratios All three banks struggling to keep NIM Cost/Income Return on Equity costs down 2016 Q12017 2016 Q12017 2016 Q12017 ..but are APB 7,6% 52,1% -13,8% managing to maintain reasonable NIM Locko 6,1% 5,4% 50,1% 56,8% 14,0% 9,8% APB 2017 performance will Pivdennyi 3,0% 4,6% 57,2% 63,4% 4,7% 8,2% be affected by capital constraints 5
Exit plans Locko Bank Pivdennyi Bank Asian Pacific Bank • The shareholders • The shares will be • The shares will be have hired sold back to two sold back to the advisors who are other main shareholder running a shareholders of • The transaction is competitve the bank expected to be bidding process to • The transaction is completed by the sell the bank expected to be end of 2017. • Currently 5-6 completed by the interested parties, end of 2017. but deal structure still uncertain 6
Distribution timeline ECFI AGM • 20 June: AGM to resolve on a share split and redemption of shares. approval of the distribution • 11 August: Last day of trading before the share split, including the right to redemption of shares. Trading window for redemption • 15 August: Record day for the share split and the right to shares in late redemption of shares. August- early 17 August- 11 September: Trading in redeemable shares possible. • September • 13 September: Record date for the redemption of redeemable Followed by shares. payout in mid September • Around 20 September: Payment, EUR 6 per redeemable share. 7
Summary and outlook for 2017 The aim is to complete exits • Complete the sale of APB from all the three • Finalise agreements for sale of Locko and Pivdennyi shares to remaining other shareholders, with completion by year-end holdings this year • Liquidate the fund as quickly and cost efficiently as possible 8
Thank you! Dubai Hong Kong Luxembourg Moscow Oslo Stockholm Tallinn 9
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