Ukraine sells small state bank at 1.35x P/B

Ukraine’s State Property Fund privatized a 99.9% stake in a small state bank, the Ukrainian Bank of Reconstruction and Development, for UAH 82.8 mln, according to its announcement on Nov. 30. A Chinese company, Bohai Commodity Exchange, was the only tender participant so it bought the bank at the starting price. The bank was the smallest in Ukraine by assets as of end-September (total assets UAH 118.7 mln) and one of five state banks. Its equity book value was UAH 61.2 mln as of end-September.

Alexander Paraschiy: It’s a real success for the government that it sold the bank at a premium to its equity (P/B of 1.35x). The fact that there was only one tender participant suggests that this success owes much to fortune. Regardless, this was the biggest privatization deal since the beginning of 2015 and a boost for the government privatization proceeds in 2016, which now amount to about UAH 0.27 bln (or 1.6% of the annual plan).

Recall also that the State Property Fund announced a repeat tender on Dec. 14 for Odesa Portside Plant at a starting price of UAH 5.16 bln, which would be the third biggest privatization in Ukraine’s history. Thus far, we are very skeptical about the Odesa Portside tender’s success.