This morning, NLB announced that it has entered into a share and purchase agreement to acquire 100% shareholding in SLS HOLDCO, holdinška družba, d.o.o., the parent company of Summit Leasing Slovenia d.o.o. and its subsidiaries, from funds managed by affiliates of Apollo Global Management Inc. (Apollo Funds), and the European Bank for Reconstruction and Development (EBRD). The acquisition is expected to increase NLB’s RWAs by app. EUR 700m, within its EUR 4bn capacity for M&As.
According to NLB, Summit Leasing is a leading provider of auto finance in Slovenia. As of 30 September 2023, it had consolidated gross receivables of app. EUR 890m, which includes EUR 635m related to the used and new vehicle segments in Slovenia, and through its wholly-owned subsidiary Mobil Leasing d.o.o., gross lease receivables of app. EUR 120m in Croatia. Summit Leasing is also a leading provider of point-to-sale consumer finance in Slovenia, recording app. EUR 95m gross receivables as of 30 September 2023.
Summit Leasing has a vast network of over 750 dealers in Slovenia and Croatia, as well as over 550 points-of-sale in consumer finance in Slovenia. By the end of 2022, Summit Leasing managed app. 140k outstanding financing contracts with over 110k customers.
NLB further notes that the consideration for the transaction represents a modest premium to the book value of Summit Leasing. Subject to the development of the business up until completion, the acquisition is expected to increase NLB’s risk-weighted assets (RWAs) by app. EUR 700m, which is within the EUR 4bn that NLB has been targeting in its M&A capacity. Cost and funding synergies are expected to ensure that the transaction is earnings accretive from the first full year of acquisition, with the full realization of cost synergies targeted within the period of app. 18 months from completion.
Completion of the transaction is subject to regulatory and anti-trust approvals and is planned for the second half of 2024. NLB’s CEO, Blaž Brodnjak, had the following to say about the transaction: ” That the time has come for the further growth of the NLB Group, albeit inorganic, should come as no surprise to anyone who has closely followed our development over the past few years. We have namely repeatedly emphasized that we are constantly monitoring market conditions and analysing potential opportunities for tactical mergers and acquisitions, that could open new opportunities for potentially even new markets to us, but above all increase added value for our stakeholders and provide our clients with additional services and solutions”.
NLB’s CEO further noted that “Leasing is one of the strategic activities of the NLB Group, so it is not surprising that we have gradually expanded this activity from the Slovenian market also to the North Macedonian and Serbian markets. We believe that leasing will become a significant part of the group. It is planned that in its mature phase, it will contribute more than EUR 1bn to the total assets of the Group, with the newest acquisition significantly accelerating this ambition. Our goal is for our leasing companies to become the leaders in the field of movables across our region and to play an important role in the mobility in the markets of our presence.”
Of course, as NLB noted in many of its results conference calls, an acquisition was just a matter of time. Summit Leasing was the obvious choice, as it was split from Nova KBM group when OTP purchased Nova KBM, due to OTP already having leasing operations in Slovenia which would lead to it having a practical monopoly. As such, it was long speculated that Summit Leasing would be the choice for the bank. Furthermore, NLB also stated its desire to enter the Croatian market in one way or another, and this presents a perfect opportunity for NLB.
Lastly, NLB was advised on the transaction by Deloitte UK Corporate Finance as the financial adviser, Deloitte CE South as the due diligence adviser, Kavčič, Bračun & Partner as a legal adviser, and Kinstellar, also as a legal adviser. The entire press release can be read here.
