September 13, 2018 - Luminor, one of the leading banks in Estonia, Latvia, and Lithuania announced today that it has entered into a new strategic corporate partnership with a consortium led by private equity funds managed by Blackstone (“Blackstone”). As part of the transaction, the consortium will acquire a 60% majority stake in the bank from its current owners Nordea Bank AB (“Nordea”) and DNB BANK ASA (“DNB”) for a cash consideration of €1 billion.
Created in 2017 through the combination of Nordea’s and DNB’s operations in the Baltics, Luminor is the 3rd largest financial services provider in the region, with a 23% lending market share, €15 billion of assets, 3,000 employees and 64 branches across the region. The bank is led by CEO Erkki Raasuke, former head of the Baltics and group CFO at Swedbank and former CEO at LHV Group in Estonia.
Nordea and DNB will retain an equal 20% equity stake in Luminor and will continue to support the bank with long term funding, expertise and ongoing representation on the Board of Directors. Additionally, Blackstone has entered into an agreement with Nordea to purchase their remaining 20% stake over the coming years.
The transaction represents the largest majority stake acquisition of a universal bank by private equity in the last decade globally, and one of the largest M&A transactions in Baltic history.
According to Nils Melngailis, Chairman of the Board of Luminor Group AB, Blackstone’s strong relationships within the financial services industry, as well as their long and successful history of supporting entrepreneurial businesses make them an ideal new partner for Luminor.
“Our strategy is to provide next generation financial services through the launch of innovative products and services tailored to the Baltic market. Blackstone’s investment is fully aligned with the bank’s vision, and their support will both strengthen and accelerate the execution of our strategy to become the leading independent financial group focused on the Baltic region.
This transaction represents a significant foreign direct investment in the region and as one of the largest private equity deals in Baltic history, Blackstone’s decision to invest in Luminor represents a validation of our strategy and is a vote of confidence in the economic outlook for Estonia, Latvia and Lithuania. Our long-term plan also remains to seek a stock exchange listing subject to prevailing market conditions,” said Melngailis.
Erkki Raasuke, the CEO of Luminor said that everyday customer service remains business as usual, and over time a new strategic owner will bring numerous advantages to both clients and the team.
“There is no other independent bank in this region that covers Estonia, Latvia and Lithuania with such a significant footprint. Our partnership with Blackstone strengthens this position for years to come and provides Luminor with the capital required for investments in new and exciting technologies needed to develop its digital offering as well as expanding current products and services.”
Raasuke added that “Blackstone is recognized for attracting exceptionally talented people with an entrepreneurial mindset. Combining the bank’s talent with our new strategic owner’s international expertise will allow us to continue to deliver best-in-class services to our customers.”
Nadim El Gabbani, Senior Managing Director at Blackstone, said: “This is an exciting opportunity to invest in an excellent business operating in an attractive market. Erkki Raasuke leads a tremendously talented management team with an outstanding track record of delivering service to customers and value to shareholders. We believe that Luminor is well positioned to continue to lead the market as an independent provider of financial services. We are excited by the partnership with management, Nordea and DNB and look forward to working together to create a stronger platform for further growth.”
Blackstone was advised by J.P. Morgan and Allen & Overy. Michael Wolf, Senior Advisor to Blackstone, will also provide support to management in the ongoing transformation of the bank.
Luminor is concurrently announcing its publication of an investment grade rating from Moody’s, in support of the transaction. Closing of the transaction is subject to local and international supervisory authorities’ approvals and is anticipated to occur in first half of 2019.
Luminor was established as an independent Baltic bank in autumn 2017 built on the Baltic businesses of Nordea and DNB and combining the experience and knowledge from the Nordic countries. Nordea and DNB announced the plans to combine business operations in the Baltic countries in summer 2016. The size of Luminor’s loan portfolio is €12 billion and it holds over €8 billion of customer deposits. Luminor’s total equity amounts €1.7 billion.
Blackstone is one of the world’s leading investment firms. We seek to create positive economic impact and long-term value for our investors, the companies in which we invest, and the communities in which we work. We do this by using extraordinary people and flexible capital to help companies solve problems. Our asset management businesses, with $439 billion in assets under management, include investment vehicles focused on private equity, real estate, public debt and equity, non-investment grade credit, real assets and secondary funds, all on a global basis. Further information is available at china.blackstone.com. Follow Blackstone on twitter @Blackstone.
Andrew Dowler/Rebecca Flower
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