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Johannesburg - Standard Bank group [JSE:SBK], Africa's biggest bank by assets, could use proceeds from Russia's Troika Dialog sale to return capital to shareholders or make acqusitions in Africa, Standard Bank CEO Jacko Maree said on Friday.
Sberbank has agreed to buy brokerage Troika Dialog for $1bn, stepping up the Russian savings bank's drive to build a universal operation that challenges rival VTB.
It will pay $372m to buy out the 36.4% stake held by Standard Bank. Standard came in as a partner to Troika at the height of the global financial crisis.
In a long-awaited deal state-controlled Sberbank, Russia's largest bank, will buy the 63.6% stake in Moscow's oldest brokerage held by a shareholder group led by chairperson and CEO Ruben Vardanyan.
The deal will cost $1bn in cash and include an earn-out fee payable after three years worth $700m to the founding shareholders if Troika hits profit targets.
"This deal is logical for Sberbank and Troika Dialog, and it will create new growth potential," Sberbank CEO German Gref told a briefing.
In a challenge to state-controlled rival VTB, which already has a strong investment banking operation, Gref said he wanted the Troika deal to propel Sberbank to a leading market position by 2014.
Gref, a former economy minister, will take over as the chairperson of Troika's board, while Vardanyan will stay on as CEO for three years. Gref forecast the earnings uplift from Troika at $200m per year over that timeframe.
Analysts said the deal signals Sberbank's ambitions to grow and build dealmaking capacity. But it would not move the financial needle for now, with Troika accounting for only about 2% of the bank's forecast 2011 earnings.
"Acquiring an investment banking franchise should help Sberbank compete against VTB on the depth and diversity of product range offered to their principal corporate client base," analysts at Renaissance Capital said in a note.
Earn-out
Standard Bank said that, in addition to the upfront cash consideration, it would also receive an earn-out fee equivalent to 8% in the increase of Troika Dialog's group valuation by the end of 2013.
"We are sad to sell our stake but we look forward to working together cross-border," said Maree.
Standard Bank will be able to book a tidy return on the $300m it put into Troika in 2009.
The company is struggling to rein in costs after an aggressive push to become a top emerging market lender, and said this month it would scale back its ambitions and focus primarily on African markets.
Terms will be finalised in the second quarter, with the transaction to be settled in two tranches, Gref said. Completion is expected in the last quarter of 2011.
Sberbank has also been linked to possible takeovers in Turkey, Austria and the former Soviet Union, with former Unicredit CEO Alessandro Profumo advising on potential deals.
Gref described Turkey as "very interesting", but said Sberbank was not in talks to take stakes in state-run lenders Ziraat or Halkbank.
Sberbank, with assets of $260bn and a market value of $75bn, is slated for further privatisation, with the state expected to offer a stake of 7.6% for sale in the second half of 2011.
Sberbank has agreed to buy brokerage Troika Dialog for $1bn, stepping up the Russian savings bank's drive to build a universal operation that challenges rival VTB.
It will pay $372m to buy out the 36.4% stake held by Standard Bank. Standard came in as a partner to Troika at the height of the global financial crisis.
In a long-awaited deal state-controlled Sberbank, Russia's largest bank, will buy the 63.6% stake in Moscow's oldest brokerage held by a shareholder group led by chairperson and CEO Ruben Vardanyan.
The deal will cost $1bn in cash and include an earn-out fee payable after three years worth $700m to the founding shareholders if Troika hits profit targets.
"This deal is logical for Sberbank and Troika Dialog, and it will create new growth potential," Sberbank CEO German Gref told a briefing.
In a challenge to state-controlled rival VTB, which already has a strong investment banking operation, Gref said he wanted the Troika deal to propel Sberbank to a leading market position by 2014.
Gref, a former economy minister, will take over as the chairperson of Troika's board, while Vardanyan will stay on as CEO for three years. Gref forecast the earnings uplift from Troika at $200m per year over that timeframe.
Analysts said the deal signals Sberbank's ambitions to grow and build dealmaking capacity. But it would not move the financial needle for now, with Troika accounting for only about 2% of the bank's forecast 2011 earnings.
"Acquiring an investment banking franchise should help Sberbank compete against VTB on the depth and diversity of product range offered to their principal corporate client base," analysts at Renaissance Capital said in a note.
Earn-out
Standard Bank said that, in addition to the upfront cash consideration, it would also receive an earn-out fee equivalent to 8% in the increase of Troika Dialog's group valuation by the end of 2013.
"We are sad to sell our stake but we look forward to working together cross-border," said Maree.
Standard Bank will be able to book a tidy return on the $300m it put into Troika in 2009.
The company is struggling to rein in costs after an aggressive push to become a top emerging market lender, and said this month it would scale back its ambitions and focus primarily on African markets.
Terms will be finalised in the second quarter, with the transaction to be settled in two tranches, Gref said. Completion is expected in the last quarter of 2011.
Sberbank has also been linked to possible takeovers in Turkey, Austria and the former Soviet Union, with former Unicredit CEO Alessandro Profumo advising on potential deals.
Gref described Turkey as "very interesting", but said Sberbank was not in talks to take stakes in state-run lenders Ziraat or Halkbank.
Sberbank, with assets of $260bn and a market value of $75bn, is slated for further privatisation, with the state expected to offer a stake of 7.6% for sale in the second half of 2011.
