Main stake in Depfa for sale

THE main shareholder in Dublin-based German public sector finance specialist Depfa Bank Plc said yesterday it was selling its 40.8% stake after the bank posted a jump in third-quarter profit and raised its 2003 guidance.

IFSC-based Depfa Holding, which groups eight German and Swiss banks and insurers, said it would place its 14.4 million shares with institutional investors via an accelerated bookbuilding process led by Merrill Lynch.

At Monday’s closing price, the deal would be worth about €1.4 billion and if completed would make the bank the second-biggest member of the mid-cap MDAX index, measured by the value of its free-floating shares.

Shares in the bank opened more than 5% weaker on news of the placement but steadied later to stand 3.9% lower at 93.50. The MDAX was down 0.6%.

The stock has more than tripled in value since hitting a 30 low in February. Depfa Bank, which provides financing for public projects such as roads and hospitals, raised its target for 2003 net profit after third-quarter earnings more than tripled to €93 million, beating market consensus.

“In the light of this result, Depfa Bank is raising the profit target for the current business year once more: net profit for the full-year is now expected to total around €350 million,” it said in a statement.

In August, the specialist bank raised its 2003 net profit forecast by 20% to €300m after its second-quarter results also beat market expectations.

Depfa said total revenue in the third quarter more than tripled to €174m. It posted a trading profit of €15m compared to a loss of €77m a year ago.

It said it expected to achieve a post-tax return on equity of almost 30% in 2003 and predicted further growth in net income in 2004.

Depfa Holding has held the stake since the privatisation and stock market listing of Depfa in March 1991.

The bank organises public sector bonds, raises money for infrastructure projects in Europe, the United States and Asia, and offers investment banking advice to public bodies.