Ibercaja has opted for the foreseeable and it is, at least, until after the summer when the market conditions could be somewhat more propitious. Today was the last day that the entity had been marked in red on the calendar to propose a jump to the parquet before July 8.
The entity, as already announced in its roadmap as a possibility, will create a Reserve Fund after the prior approval of the Bank of Spain that includes the endowment of an item equivalent to 1.75% of the bank’s risk-weighted assets, as reported by the entity this Friday to the National Securities Market Commission (CNMV).
The maximum period for the endowment of this fund extends until the end of 2025, thereby removing the pressure of having to go public before the end of 2022, according to the requirements of Brussels and the Government. The objective of the operation is to reduce the Foundation’s weight in the bank’s capital to below 50%, which currently controls 88%.
However, the entity has underlined in its letter to the regulator that it maintains “the commitment to go public, once market conditions are more propitious,” the statement reads. The current uncertainty in the markets, which began with the outbreak of the invasion of Ukraine in February and has now skyrocketed due to the possibility of a recession and the accelerated pace of central banks in the face of rate hikes, keeps the so-called index of the fear (VIX) in the 28 points. Historically, all market placements are suspended when volatility exceeds 20 points, levels where it has been installed since the beginning of the year.
The endowment of the reserve fund will amount to 310 million euros, according to sources from the entity, and Ibercaja has a term to be able to do so until 2023 and, even, “2024 in some case”, clarify financial sources. If it were done linearly, only with the dividend that the Foundation collects of 100 million per year, it could be covered from the results of 2021, 2022 and 2023.
A higher valuation
The frustrated placement in January was caused by a price issue, as well as uncertainty, since it coincided with higher inflation and, later, with an unexpected war unleashed by Russia. Now, the context is very different as the central banks are trying to chase the rise in the CPI, and a rise of 75 basis points is already discounted before the end of the summer, between July and September, by the European Central Bank.
The current valuation of Ibercaja would start from a multiplier over the book value of the entity of 0.6 times, which is 20% higher than the 0.5 times that Ibercaja would have settled for in January and which it did not achieve, according to sources familiar with the negotiations. “In February there was no limit. There was a price range and a dignity” that Ibercaja was not willing to give away given the uncertain situation due to the war, according to these sources. But it was a long way off, since investors – mostly opportunistic funds – were not willing to pay more than about 0.30/0.35 times the value of their own funds, which currently amount to 3,264 million euros. , at the end of March.
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