Moldova’s biggest bank MAIB plans IPO abroad

Moldova’s biggest bank MAIB plans IPO abroad
By Iulian Ernst in Bucharest September 5, 2021

Moldova Agroindbank (MAIB), the biggest bank in Moldova with around 30% of the banking system’s total assets, aims to launch an IPO around 2023-24 in London, Amsterdam, Warsaw or Bucharest, according to board member Vasile Tofan quoted by

Commenting on attempts to seek a strategic investor, Tofan said that “unfortunately, we have to understand that the reputation of the Moldovan banking system is still not very good.”

The bank is 41% controlled by the European Bank for Reconstruction and Development (EBRD) in partnership with two investment funds.

The bank is already listed on the Moldovan stock exchange, however, the local bourse lacks liquidity.

Fugitive businessman Veaceslav Platon, one of the bank’s former owners, warns that the move would be risky as long as he still seeks to recover his shares in court.  

Platon was stripped of his shares in 2016, as part of a programme to make bank ownership more transparent after the $1bn bank frauds inn Moldova. No bidder showed up for his shares, put up for sale by the state, apparently because of the risks of legal complications.

Eventually, in 2018, the EBRD and two investment funds, Horizon Capital of US and Invalda INVL of Lithuania, sealed the purchase contract through a London-based limited liability company with a €1,000 capitalisation (HEIM Partners).

The three investors paid MDL450mn (€22.9mn) in October 2018 for a 41% stake in MAIB.

They will soon be in a good position to exit — and Platon has suggested that is what they envisage — and remove themselves from the risks involved in unfinished or new legal actions initiated by the former owners of the bank including Platon. 

Analyst Stanislas Madan of Expert-Grup has said he also believes that the investors envisage an exit via the IPO.

However, given the expected improvement in the judiciary system under the new pro-EU regime in Moldova, such risks as those mentioned by Platon are rather diminishing.

MAIB has not distributed yet dividends for FY2019 and FY2020, due to the pandemic, but in the summer of 2021, it confirmed its policy for a 30-50% payout ratio. Depending on the payout ratio, the three investors would cash between MDL474mn and MDL791mn for FY2020-21 plus the first seven months of 2021 — meaning between €22.3mn and €37.1mn compared to MDL450mn invested in 2018. For 2018, the investors have already received €4.7mn, judging from the MDL213 per share dividend announced by MAIB in April 2019.

MAIB’s return on equity (ROE) is between 10% and 15%, but board member Tofan said in an interview given to in August the target is 20%. He argues that the cost of capital in Moldova is around 15%.

“This is the current level of banks in Romania,” he says.

In fact, the biggest ROE ratio in the past decade was reached in 2018 before the recession, during the exuberant lending period, and it was 17%. In 2019 before the crisis, the Romanian banking system’s ROE was 14.6%.

“Even the Russian giant Sber has an ROE of about 16%. Tinkoff Bank (Russia), where we were shareholders, 40%, and Kaspi Bank (Kazakhstan) 80%. Currently, MAIB earns less than the cost of capital for Moldova, which is about 15%,” said Vasile Tofan.

Moldova Agroindbank                 
    Oct-18 2018 2019 2020 Jul-21 total incl 2018 2019-2021
Price @41% MDL mn 450.0            
Net Profit @100% MDL mn   531.5 703.7 523.8 353.4 2,112.4 1,580.9
Net profit @41% MDL mn   217.9 288.5 214.8 144.9 866.1 648.2
Investors' dividends @50% payout MDL mn   90.8 351.9 261.9 176.7 881.3 790.5
Investors' dividends @30% payout MDL mn   90.8 211.1 157.1 106.0 565.1 474.3
XR eop   19.6 19.5 19.3 21.1 21.3    
Price @41% EUR mn 22.9            
Net Profit @100% EUR mn   27.2 36.5 24.8 16.6 105.2 77.9
Net profit @41% EUR mn   11.2 15.0 10.2 6.8 43.1 32.0
Investors' dividends @50% payout EUR mn   4.7 18.3 12.4 8.3 43.6 39.0
Investors' dividends @30% payout EUR mn   4.7 11.0 7.4 5.0 28.0 23.4
Source: BNM, IntelliNews BNE