November 23, 2017 / 5:17 PM / a year ago

Nykredit owner decides to sell stake, drop IPO plan

COPENHAGEN (Reuters) - The main owner of Nykredit [IPO-NYKRD.CO], Denmark’s largest mortgage lender, has decided to go ahead with the sale of a 10.9 percent stake to five pension funds, putting an end to plans to publicly list the company.

At a meeting on Thursday, Forenet Kredit’s 104-member Committee of Representatives approved the 7.5 billion Danish crown ($1.2 billion) deal, which its board presented two weeks ago.

“With this sale Nykredit gets access to more capital, and that has been crucial for Forenet Kredit in the negotiations,” Forenet Kredit’s chief executive Louise Mogensen said in a statement.

“It’s important for us as owners that we are able to step in, if Nykredit should need capital,” Mogensen said.

Forenet Kredit, which is owned by Nykredit’s customers, will own 78.9 percent of the company once the deal is completed, while the pension funds - PFA Pension, PensionDanmark, PKA, AP Pension and MP Pension - will own 16.9 percent.

Nykredit said in September it had chosen JPMorgan (JPM.N), Morgan Stanley (MS.N) and Danske Bank (DANSKE.CO) as joint global coordinators for an initial public offering (IPO).

Forenet Kredit’s board estimated an IPO would have cost up to around 400 million crowns for financial advisers, lawyers, auditors and other expenses, whereas the stake sale would only cost around 70 million crowns.

Nykredit said almost two years ago it was preparing an IPO to meet expected higher capital requirements from, among other things, so-called Basel IV regulations.

Forenet Kredit said in recent documents the Danish regulator had assessed that Nykredit’s capital requirements would only be slightly higher under the deal with the pension funds than it would have been as a listed company.

($1 = 6.2855 Danish crowns)

Reporting by Teis Jensen; Editing by Susan Fenton and Mark Potter

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