October 4, 2021
The Company Publishes the Report on AS DelfinGroup by LHV Bank
Currently subscription for AS DelfinGroup IPO shares is taking place on the Nasdaq Riga stock exchange. LHV Bank regularly writes reports on companies listed on the Nasdaq Baltic Exchange, providing institutional investors with an independent assessment of companies in the Baltic region, including financial forecasts. As of 4 October, the report about AS DelfinGroup made by LHV Bank is also available on the company's website in English: www.delfingroup.lv.
The 30-page research report on AS DelfinGroup written by the independent analysts of the LHV Bank is based solely on the announcements published by the company and publicly available information. The company's post-money valuation (or valuation after the raised capital in the IPO process) is estimated between 80-90 million euros, assuming that at least 12.5 million euros will be raised during the IPO (so the company is able to achieve its financial targets). According to the prospectus of AS DelfinGroup, as a result of the IPO, the company plans to attract new capital of up to 12.8 million euros. Didzis Ādmīdiņš, Chairman of the Management Board of AS DelfinGroup, comments: “The IPO share price is 1.52 euros, which means that the company values itself pre-money at approximately 60 million euros. If the raised new capital is added arithmetically, the value stands at around 73 million euros. However, LHV Bank's analysts (taking into account their value range midpoint, i.e. 85 million euros) believe that the value of the company is higher than the IPO price.”
Analysts estimate that the company is attractive mainly because it is one of the leading companies in the non-bank consumer lending market in Latvia, which allows efficient use of economies of scale, and additional new capital from the IPO will allow the company to strengthen its capital base by reducing financing costs and to proceed with investments in IT and new product development. The company has shown profitable growth and has been an attractive dividend payer. However, LHV Bank's analysts mention that the influencing risk factors in determining the company's value can be slower growth in the issuance of consumer loans than forecasted and a possible decrease in quality of the loan portfolio.
Didzis Ādmīdiņš, Chairman of the Management Board of AS DelfinGroup: “We respect the opinion of independent analysts about the value of the company. We have read the report and believe that it is of good quality. It is common practice that the IPO share price is lower than the objective fair value of the shares, as this is how rewards in the form of so-called IPO discount are passed to the investors who trust and dare to become shareholders of a company in the IPO process.”
The number of shares to be issued in the IPO is up to 8 395 000, and the total planned number of shares of the company after the IPO will be up to 48 395 000. Accordingly, the fair value of one share currently might be approximately in the range of 1.65 to 1.86 euro (given the new capital raised is at least 12,5 million euros).
The Financial Capital and Market Commission (FCMC) registered AS DelfinGroup prospectus for initial public offering on 21 September 2021. Full prospectus is available on https://www.fktk.lv/wp-content/uploads/2021/09/AS-DelfinGroup-IPO-prospectus-2021.pdf. The IPO period (subscription) has commenced simultaneously in all three Baltic states at 10:00 (Riga time) on 28 September. It will close at 15:30 (Riga time) on October 11.
The IPO price of one share is 1,52 euro. Minimum amount of subscription is one share. The maximum amount of subscription is not limited. To subscribe for shares investors must submit a subscription order to their bank. Subscription will be facilitated by the members of Nasdaq Riga: LHV Bank, Swedbank, SEB, Luminor Bank, Citadele, Rietumu Banka, BlueOrange, Signet Bank, Siauliu Bankas, Sandinaviska Enskilda Banken, Nordea Bank and others. Full list of Nasdaq Riga members is available on: https://nasdaqbaltic.com/statistics/lv/members.
About AS DelfinGroup
AS DelfinGroup is a licenced technology-based financial service company that was established in 2009 and operates under the brand names Banknote and VIZIA. The company continuously develops and offers consumer and pawn loans, loans developed for senior citizens, Buy now pay later loans (BNPL loans), as well as sale of pre-owned goods both online and at more than 90 branches across Latvia. On average, 35,000 thousand loans are issued every month and serviced by the professional team of more than 250 AS DelfinGroup employees. The company has a total of over 400,000 registered customers. Since 2014, AS DelfinGroup has been known on the Nasdaq Riga as a bond issuer. The company regularly pays dividends to its shareholders. In 2020, the company's net loan portfolio grew to EUR 34.6 million, while its EBITDA reached EUR 9.3 million, with profits before income tax for dividends of EUR 4.65 million. The company’s sustainability is based on focused corporate governance, fintech innovation, responsible lending, financial inclusion and facilitating the circular economy. The company has been profitable every year since 2010.