Deutsche Pfandbriefbank to place 75% of share capital via IPO in July

Deutsche Pfandbriefbank (PBB), the European commercial real estate bank spun out of the State-rescued Hypo Real Estate, has secured approval from the German Financial Markets Stabilisation Agency (FMSA) to return to the private sector through an initial public offering (IPO) in July.

Screen Shot 2015-06-10 at 13.48.26The FMSA – the German State fund which manages Hypo Real Estate Holding AG (HRE), PBB’s sole shareholder – and the Interministerial Steering Committee will suspend concurrent attempts to sell PBB through a tender process, in favour of an IPO.

The planned flotation will see a minimum stake of just above three-quarters of PBB’s share capital placed – 75.1% – while the Federal Republic of Germany, indirectly via HRE, will retain a minimum 20% stake in PBB for a two-year period based on a respective lock up commitment. 

PBB will redeem FMS’s €1bn silent participation within the framework of the IPO.

Citigroup Global Markets and Deutsche Bank AG have been mandated as joint global co-ordinators and joint bookrunners for PBB’s flotation. 

JP Morgan Securities, Commerzbank AG and Joh. Berenberg, Gossler & Co. KG will act as joint bookrunners.

Dr Günter Bräunig, Chairman of the Supervisory Boards of HRE and pbb, said: “PBB has been realigned, and its management team has successfully positioned the bank on the lending and funding markets. Today it is flotation-ready in every possible way.”

Andreas Arndt, PBB’s Co-CEO and CFO, added: “Investors benefit from pbb’s sustainable business model, in a growing market, and from an attractive risk/return profile. We have a high-quality portfolio and very strict risk management. We refinance our lending business on a matched-maturity basis to the greatest extent possible, and pbb’s capitalisation is very good indeed. 

“We will adhere to this conservative approach, and we are determined to enhance profitability through attractive new business.”

Thomas Köntgen, Co-CEO and Treasurer of pbb, said: “Our strength lies in the high degree of penetration we have achieved in our strategic markets. In our European core markets, we offer our clients a strong local presence and expertise covering all functions of the financing process chain, combined with a cross-border approach. 

“Thanks to our structuring expertise, and through cooperation with financing partners, we are in a position to also realise complex financings.”

PBB wrote €10.2bn of new loans in 2014, taking its net loan book to €28.4bn. In the first quarter of 2015, PBB has wrote €2.8bn in new loans, increasing the strategic portfolio to just above €30bn.

Since 2012, net interest income – the bank’s most important source of income – rose from €296m to €421m in 2014. Costs decreased from €341m to €251m during the same period. 

Pre-tax profit rose from €124m in 2012 to €174m in 2014. 

In its REF segment, PBB concentrates generally on medium to large financing transactions of €10m to €120m per loan and, by its own estimation, was the third largest real estate finance lender in Germany in 2014 and among the top in Europe.

PBB has 842 employees operating in 10 locations in six countries – Germany, the United Kingdom, France, Spain, Sweden and Japan, with the vast majority of which were located in Germany.

jwallace@costar.co.uk

About CoStar News

Finance Editor, CoStar News
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