MTS Bank Announces Plans for an IPO on the Moscow Exchange

MOSCOW, April 12, 2024 — MTS Bank has announced plans to carry out an initial public offering of its common shares on the Moscow Exchange. Investors will be offered newly issued shares, and the proceeds will be used to implement the bank's growth strategy and further scale its high-margin retail business. The majority shareholder, mobile provider Mobile TeleSystems (MTS), does not plan to sell any of its shares in the IPO and will retain a majority stake in the bank after the offering.

A new stage of development

"The plan to become a public company confirms that MTS Bank has entered a new stage of development. This will give additional momentum to the bank's profitable growth and thus make it possible to create additional value for shareholders," MTS Bank CEO Ilya Filatov said in the press release.

The offering will be open to a broad circle of market participants: the IPO is available to qualified and unqualified investors, both retail and institutional, the bank said.

Deal mechanics: lock-up and stabilization

The announcement sets out the key parameters protecting investors in the first months of trading:

The bank, its majority shareholder and parties affiliated with them are expected to commit to a lock-up period of 180 days from the start of trading on the Moscow Exchange.
The IPO will include a stabilization mechanism operating for up to 30 days after the start of trading.
MTS is not selling any of its shares in the placement and will keep a majority stake in the bank.

Parameters of the new share issue

In the middle of March 2024, MTS Bank's board of directors approved a new issue of common shares totaling up to 3.6 billion rubles. The bank can increase its charter capital by 3.593 billion rubles, to 18.6 billion rubles, through the placement of 7,187,042 new common shares with a par value of 500 rubles each. The shares can be placed in a public offering.

At its maximum, the new issue is equivalent to about 19.3% of the bank's increased charter capital and 24% of its current charter capital. If the issue is placed in full, MTS's stake in the bank could fall below 80.5% from 99.8%; the parent company's board took this information under advisement and directed MTS management to continue measures aimed at further reducing PJSC MTS's equity stake in PJSC MTS Bank.

Medium-term targets: double the client base, ROE to 30%

"Our own expertise in retail banking and integration with the ecosystem of Russia's leading telecom provider create significant potential for the further profitable growth of the business and increasing our share of Russia's retail lending market. The bank aims in the medium term to double its loan portfolio and client base (to 8 million active clients), anticipating a gradual increase in return on equity to 30%," MTS Bank said.

Market position and current results

MTS Bank was Russia's 24th largest lender by assets at the end of 2023, according to the Interfax-100 ranking. In the first quarter of 2024, the bank's net profit under Russian Accounting Standards rose 32% year on year to 3.7 billion rubles, while its retail loan portfolio totaled 359 billion rubles.

Company and contacts

MTS Bank (PJSC MTS Bank) — a Russian retail lender within the ecosystem of mobile provider MTS; the IPO plans were announced in the bank's press release of April 12, 2024, reported by Interfax.

Contacts: statements of MTS Bank CEO Ilya Filatov and the bank's press release of April 12, 2024 cited in the Interfax report.

Website: https://www.mtsbank.ru/