GE Money Bank plans to list on Prague Stock Exchange

Prague Stock Exchange, Czech Republic (Aktron, CC BY-SA)

GE Money Bank - a unit of GE Capital in the Czech Republic - plans to float a majority of its shares on the Prague Stock Exchange.

The US giant is moving from finance back to its industrial roots, as the float will include both GE Money Bank and the company’s car financing business.

This flotation will be the largest initial public offering (IPO) in Central Europe since 2011 and one of the biggest ever for the local bourse. The Prague equity market’s value has shrunk by 70 per cent in the past seven years and the IPO would be the largest in the country since a USD2.5bn offering by New World Resources in 2008.

The latest addition to the Prague market was Kofola CeskoSlovensko, a soft drinks producer – which raised an equivalent of USD32m in December.

Analysts estimate GE Money Bank will list with a value of around EUR1.5bn–2.2bn, based on its book value. Pricing in that range would make it the fourth-largest Czech traded company. The bank has an equity value of about EUR1bn.

The announcement comes two weeks after GE sold its majority stake in Poland’s BPH Bank for USD329m. This followed a spin-off of Syncrony, its US consumer finance business, and the USD1.67bn IPO of Cembra, formerly GE Money Bank in Switzerland.

“This is one of the most profitable banks in Czech Republic and essentially invented consumer lending here,” said GE Money CEO Tomas Spurny. “We have had lots of positive feedback from a number of institutional investors,” he added. Spurny, who will continue to run the business after the listing, said that GE had held “excellent and strong” talks with potential strategic and trade buyers for an outright sale before deciding on an IPO.

Citigroup, Goldman Sachs and JPMorgan Chase are serving as joint global coordinators on the offering. GE Money Bank plans to sell the majority in an offering to institutional investors, with no time-frame. “We expected them to sell the whole stake directly to a strategic investor, but either they haven’t been able to agree on such a deal or they believe they can get a better price in an IPO,” analyst Milan Lavicka told Bloomberg.

Czech GE Money Bank, which has 1.2 million of customers and 229 branches, said its tangible equity at the end of 2015 was USD1.2bn, with a core equity tier one capital ratio of 17.7 per cent. GE Capital will aim to hold “a significant minority stake” in the bank for at least six months, under the terms of a proposed lockup agreement. This would be reduced over time as the bank moves to full independence. As part of its separation from GE Capital, the bank will most likely be rebranded.

Back to the roots

GE is disposing of USD200bn worth of financial assets and returning to its industrial roots. “An IPO of GE Money Bank to institutional investors will mark another milestone toward achieving GE’s objective of reducing its financial services assets, in line with the broader strategy of focusing on investment and growth in its technology and industrial businesses,” Richard A. Laxer, the president and chief executive of GE Capital International, said.

GE said in early 2015 that it planned to sell most of GE Capital within two years and has since entered into agreements for sales worth about USD165bn.

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