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Markets stormy as AXA eyes 10% stake in Hungary’s OTP

Deals

OTP Bank Nyrt, Hungary’s biggest lender, rose the most in a month in Budapest trading on speculation France’s Axa SA may buy a stake in its insurance unit and a 10% holding in the bank.

The stock rose as much as 2.5% to Ft 9,469 and traded at Ft 9,395 at 12:28 p.m. in Budapest. That’s the biggest gain since the shares advanced 3% on Sept. 27, when the lender said it was looking for a partner to run OTP Garancia, the insurance division. Trading of OTP stocks became suddenly turbulent as an advertisement for the next issue of business weekly Figyelő appeared on newsstands and billboards in Hungary, featuring the smash-hit headline “Multi-Billion Euro Deal: AXA to buy Garancia Insurance and 10% of OTP Bank".

Market speculation of AXA eyeing OTP’s insurance company arm Garancia is not new. It had been taken for granted by many, however OTP never confirmed the news saying its management was in talks with several potential investors regarding the sale. On the other hand, the possibility that AXA may acquire a 10% stake in OTP Bank comes as a surprise.

In Portfolio.hu’s view, the proposition is certainly a friendly one that suggests the possibility of a future strategic alliance. What remains unclear, though, is the source of the 10% acquisition. Theoretically, one cannot exclude the existence of one or more stakeholders seeking to sell a 10% stake. Another possibility is a capital raise through new issue, however in light of OTP’s well-known anti-dilution policy this is unlikely. The most likely scenario is that AXA will acquire several smaller packets of OTP shares from various sources. (portfolio.hu, bg)

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