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Bringing the management's share in Bank Saint Petersburg to a controlling interest would send a positive signal to investors and serve as an upside driver for the bank's shares in the near term. It is possible that the management could sell its controlling interest to a strategic investor, which could lend additional support to the company's stock valuations over time.
According to a press release from Bank Saint Petersburg on May 27, its management had bought 11.4% of the bank's shares, bringing its total holding to above 60%. The deal is to be completed by year-end 2008. The price of the deal has hot been disclosed.
In our view, by bringing its stake in the bank to a controlling interest, the bank's management would send a positive signal to investors both in the short and long terms. The move would indicate the bank's determination to actively develop its business, which would cause its value to grow. In addition, it is not ruled out that the controlling stake could be sold to a strategic investor, which, in our view, might also benefit the company's stock and serve as an upside driver for its stock valuations in the future.
We estimate the fair value of one common share in the bank at USD 6.42, with an upside of 6.1%, which corresponds to HOLD recommendation. The fair value of the preferred stock should be USD 2.16 per share, with an upside of 32.8%, which corresponds to BUY recommendation. Konstantin Romanov
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Saint Petersburg Bank
Capitalization: $321 018 000,00
Common shares:
Price: $1,10
Delta week: 1,4%
Delta month: -6,0%
Delta year: -79,0%
Preferred shares:
Price: $0,53
Delta week: -16,0%
Delta month: -8,7%
Delta year: -72,4%
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0.569
0.073
