Standard Bank Group is to sell its 36.4% shareholding of Troika Dialog, a leading independent full service investment bank and asset management firm in Russia.
TDM Limited Partnership (TDMP), the 63.6% controlling shareholder of Troika Dialog, led by Mr Ruben Vardanian, Sberbank of Russia and Standard Bank Group have agreed on the terms of Sberbank's proposed acquisition of Troika Dialog.
Sberbank is the largest bank in Russia, Central and Eastern Europe, with approximately 30% of the total assets of the Russian banking system, a market capitalisation of over US$75 billion and assets exceeding US$260 billion.
TDMP's rationale for the transaction is to combine Troika Dialog's leading investment banking capabilities with Sberbank's leading commercial and retail banking platform to form a universal bank that will be strongly placed for long-term growth in Russia and the Commonwealth of Independent States (CIS) and will be ideally positioned for the Russian government's recently-announced privatisation programme.
Standard Bank Group will retain strong links to Troika Dialog and leverage its relationship with Sberbank.
Under the agreed terms, Sberbank will acquire the entire shareholding of Troika Dialog (comprising TDMP's 63.6% and Standard Bank Group's 36.4% shareholding) for an upfront cash consideration of US$1-billion plus an earn-out payment at the end of 2013.
Standard Bank Group will sell all of its shareholding in Troika Dialog for an initial cash amount equal to its carrying value at 31 December 2010 of $372-million, and will receive an earn-out payment of about 8% of any increase in the value of Troika Dialog as at the end of 2013. This enables the group to participate in the growth of the value of the business over time and provides a platform for enhanced cooperation with the leading banking group in Russia.
Standard Bank Group became a significant shareholder in Troika Dialog, a leading independent Russian investment bank, in September 2009, through a transaction in which the group invested US$300-million in Troika Dialog (comprising cash of US$200-million and the net asset value of the group's wholly-owned Russian banking subsidiary, ZAO Standard Bank, which was transferred to Troika Dialog), in exchange for its final shareholding of 36.4% of Troika Dialog.
The transaction is subject to formal documentation and a number of regulatory approvals. The completion date in respect of the transaction is expected to be in the last quarter of 2011 and the initial proceeds on such disposal would be received only at that time.
In terms of the agreement, Troika Dialog will operate as a stand-alone entity within the Sberbank group of companies for the next three years. Sberbank is confident in Troika Dialog's management team, highly values its international reputation and Troika Dialog's strong brand appeal. Ruben Vardanian will remain as CEO (President). Sberbank representatives will join the Troika Dialog Board of Directors.
Chief Executive of Standard Bank Group Jacko Maree says: "While we are reluctant sellers of our stake in Troika Dialog, this transaction presents an enhanced opportunity to connect and service our clients by leveraging our existing strong relationships into the combined Sberbank -Troika Dialog in Russia and the CIS. Preliminary discussions to capture additional opportunities flowing from this transaction are encouraging. We are confident that our strong African presence, combined with Sberbank and Troika Dialog's regional leadership, will provide an enhanced range of mutual business opportunities."
Herman Gref, CEO and Chairman of the Board, Sberbank of Russia, says: "Sberbank is acquiring the leading investment banking platform specialising in securities trading, brokerage, mergers and acquisitions, corporate finance, asset management and private banking, all of which will be offered to our clients in Russia, the CIS and beyond.
"We are gaining the unique opportunity to offer modern financial services to more than 80 000 small and mid-sized Russian companies that up until now lacked such possibilities. Sberbank and Troika Dialog have cooperated for many years, and we plan to invest in our combined team to fully develop its potential and maximise the synergetic impact. In the next 3-5 years we will create the leading Russian participant of the corporate and investment banking services market, taking first and second place on the market for each product line."
Troika Dialog CEO and Chairman of the Board of Directors Ruben Vardanian says: "This deal creates far-reaching opportunities to take our investment banking business to a new, global level by taking advantage of the unparalleled access to a wide network of large Russian and foreign corporations and government institutions, the largest branch network in Russia and significant financing opportunities through leveraging Sberbank's balance sheet. The combination of platforms shall allow us to offer our clients universal financial solutions using a broadly diversified product and services offering."
Sberbank of Russia (Sberbank) is the largest bank in Russia, Central and Eastern Europe, with about 30% of the total assets of the Russian banking system. The Central Bank of the Russian Federation is the founder and the majority shareholder of Sberbank (over 60% of the voting shares), with the rest of the shares dispersed among more than 260,000 individuals and legal entities.
The bank has the most widespread branch network in Russia: 18 Regional Head Offices, over 20,000 branches and banking outlets, as well as subsidiaries in Kazakhstan, Ukraine and Belarus. Sberbank holds the General License No. 1481, issued by the Central Bank of the Russian Federation.
See www.sberbank.ru for more.
About Troika Dialog
Founded in 1991, Troika Dialog is the leading independent full service investment bank and asset management firm in Russia. The company's business consists of securities sales and trading, investment banking, private wealth and asset management, retail distribution and alternative investment. Troika Dialog's operations are located in 21 cities across Russia plus offices in London, New York, Kyiv, Almaty and Nicosia. See www.troika.ru for more.
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