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ANALYSIS: Trade between Moneta and PPF may run into a bottleneck

In the takeover proposal, it is crucial that the shareholders approve the subscription of Moneta shares exclusively by the PPF Group. Moneta is to receive 23.31 billion crowns from PPF. To this amount, he will add 2.59 billion from his own pocket and send the total amount of 25.90 billion to PPF, for which he will acquire one hundred percent of the shares of the Air Bank group. It consists of Air Bank, Czech and Slovak Home Credit and Benxy (operates peer-to-peer lending under the Zonka brand).

But it will not be easy to enforce the change in Moneta’s capital. “They need 75 percent of the vote. I reckon it will be Petrus Advisers (Monet’s activist shareholder – editor’s note) and block other shareholders, “warns a source from the Central European investment market on condition of anonymity. PPF offered to buy shares for the price of 80 crowns for one. “It is usually done by sweetening the menu. They will offer shareholders, for example, 90 crowns per share, and they will all sell it to them, “adds the same investor. However, other voices from the market add that the takeover is currently better prepared than three years ago, when the possibility of merging Moneta with Air Bank and other PPF financial companies came into play for the first time.

In addition to obtaining 75 percent of the votes of the participating shareholders at the General Meeting, shareholders with more than fifty percent of the votes are required to attend. However, a majority of the shareholders’ votes at the General Meeting with the aforementioned participation is sufficient to approve the acquisition itself. The extraordinary general meeting of Moneta is to take place at the end of June this year.

PPF Group now states that it owns 29.94 percent of the shares in Moneta. However, according to the financiers contacted, it is possible that other shares are held by related parties. On the other hand, more passive investors have already sold their shares. “The structure may be dominated by more active players who will fight,” points out Cyrrus’s portfolio manager Tomáš Pfeiler. The British Petrus Advisers fund is one of the harshest critics of the whole transaction. However, the investment colossus Franklin Templeton does not like the intention either.

Moneta has signed an agreement with PPF to acquire Air Bank, Home Credit and Benxy

Any increase in the price per share, on the other hand, would be appreciable. Following the settlement of the acquisition, the PPF Group will own a total of 55.38 percent of the shares, according to a Moneta Money Bank report, and will have to make a mandatory takeover bid consisting of a mandatory redemption of up to 100 percent of Moneta’s shares at least CZK 80 per share, unless the Czech National Bank sets a different price. . It is calculated that the takeover bid will come in November and the repurchase would then be settled in January 2022.

The remaining shareholders currently hold around 358 million Moneta shares. If everyone wanted to sell the shares, it would cost the PPF Group almost 29 billion crowns. “Not all shareholders are expected to sell their shares,” adds Pfeiler. However, it would probably not be advantageous for PPF for too many shareholders to take advantage of the repurchase offer.

Moneta's shares are still recovering from the shock, but analysts predict steep growth

Petrus Advisers has previously described the transaction as a “poisoned offer to save PPF Group’s banking activities.” Air Bank earns money by financing the activities of the Home Credit Group. Petrus Advisers states that thirty billion crowns are invested in this way.

Another difficulty is the providers of consumer financing on the Czech and Slovak Home Credit market. “It’s a moribund business. Banks are taking over, “points out the source from the Central European financial market. It is so interesting for PPF to “share” the problems with small shareholders.

However, the same problematic point as three years ago is the valuation of Moneta and PPF financial companies. “Consolidation makes sense strategically, but the parameters are insane,” emphasizes Pfeiler, adding that PPF’s financial business is valued too high at 2.5 times its equity. For comparison: the Austrian owner of Česká spořitelna – Erste Group Bank – trades for 0.8 times its equity.

PPF takes significant risks, says Moneta's executive director Tomáš Spurný

PPF Group Petr Kellner, who died in March, invests in many sectors, from financial services, telecommunications, real estate, engineering to biotechnology.

At the end of the first half of the year, PPF owned assets worth 44 billion euros (approximately 1.15 trillion crowns) and employed 98,000 people worldwide. Moneta Money Bank has been operating under its current name since 2016. At that time, the bank’s name was changed from the former GE Money Bank in connection with its listing on the stock exchange in May of the same year. Moneta is one of the largest companies traded on the Prague Stock Exchange.


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