Last week's news reports from Slovenia are letting us know that the Slovenian state holding company (SDH) decided to privatise Nova Ljubljanska Banka (NLB), the country's biggest bank, through initial public offering (IPO). The decision has been made after Deutsche Bank – the appointed advisor in the process – conducted a feasibility study and consulted with a number of institutional investors, reaching the conclusion that in the current economic environment, a parallel listing of shares on the Ljubljana bourse and the International stock exchange (ISE) presents a better action than a trade sale of the bank's shares to a strategic buyer or financial investor. According to SDH, the sell-off process is not expected to happen before autumn of this year, with the completion anticipated by the end of 2017.
Reports explain the reasoning behind the parallel listing of shares as having a two-folded benefit. On the one hand, it is expected that the listing of NLB shares on LJSE will provide positive impact for the development of the Slovenian capital market, while on the other hand, the significantly more liquid international stock exchange will make it possible for NLB to attract a broader base of international investors, at the same time allowing for direct benchmarking with relevant peers and deeper research analyst coverage, along with other benefits of being present on a major international stock exchange.
Moreover, the SDH claims that it will propose an investor friendly governance network to NLB, for the purpose of further increasing the bank's attractiveness for international investors. As part of the IPO process, the draft will be provided by Deutsche Bank.
In order to provide a bit of historical context on the entire issue, it should also be noted that in December 2013, the Slovenian government had to recapitalise the country's three biggest banks - NLB, NKBM and Abanka, for the sake of avoiding an international bailout, giving the current Slovenian government a sensible task of trying to recoup some of that money now by selling the bank's state assets.