Bank BPH has announced the sale of a 10% stake in Commercial Union PTE (market leading pension fund company) to the current shareholders, AVIVA International Insurance (will buy 8.9%, increasing its stake to 38.9%) and BZ WBK (will buy 1.1%, increasing its stake to 11.1%). The price of the transaction was set at PLN 200m (1,370 shares x PLN 145,985.4/share). The transaction is a subject to regulatory approval.
Our view: Despite that the transaction was anticipated by the market (Polish law does not allow banks to hold stakes in more than one pension fund company and Bank Pekao is an owner of OFE Pekao), we still expect a positive market reaction to the announcement of the one-off capital gain. The price of the transaction, equates to an estimated 2006F P/E of 13.6.x (2005A P/E of 15.2x) and seems reasonable as it also implies 7.3% of AUM.
While the transaction is the subject to the regulatory approval we expect this not to be an issue as Bank BPH sales its stake to the existing shareholders.
CU PTE (AUM of PLN 23.5bn as of August 2006, 1H06 net earnings of PLN 73.7m) is the leading pension fund company on the Polish market.