Komercni banka announced it sold its 100% stake in its asset management subsidiary to Societe Generale Asset Management.
As of 31 March 2005 IKS had CZK 28m of assets under management. With a market share of about 14% IKS ranks among the 3 top players on the Czech asset management market.
The transaction was settled at an agreed price of CZK 265 million. The price was supported by an independent valuation of IKS performed by a international advisory firm. The sale price represents a P/BV of 1.8, which is in line with our expectations. In April 2005 IKS also distributed to KB CZK 96m in retained profit (compared to CZK 187m in 2004).
As the net value of IKS in KB books stands at CZK 75m, the pre-tax net profit from the sale is CZK 190m (or CZK 5 / share) plus CZK 96m in dividends. The transaction is to be booked in 2Q 2005.
The sale of the subsidiary to SGAM was expected, as the management announced it already this year in March and we already included into our 2005 projections.
We view the sale of IKS as neutral to KB financials, as the two units will have a distribution agreement on the sale of funds and asset management products and will share the fees.
The offloading of non-core subsidiaries or their integration into SG group in in line with the strategy announced by management three years ago.