European Commission clears Blackstone to buy Luminor

TALLINN – The European Commission has approved the acquisition of sole control over Luminor Bank of Estonia by the United States-based Blackstone Group.

"The European Commission has approved, under the EU Merger Regulation, the acquisition of sole control over Luminor Bank of Estonia by the Blackstone Group of the US," the Commission said in a press release on Tuesday. 

The Commission concluded that the proposed transaction would raise no competition concerns, given its limited impact on the market structure.

Nordic banks Nordea and DNB announced in mid-September that they will sell a 60 percent stake in Luminor, a bank operating in the Baltic states, to a consortium led by private equity funds managed by US investment giant Blackstone with the volume of the transaction being one billion euros.

As a result of the transaction, Nordea and DNB will each hold approximately 20 percent of Luminor and maintain ongoing representation on Luminor's board of directors. Additionally, Blackstone has entered into an agreement with Nordea to purchase their remaining 20 percent stake over the coming years. DNB wishes to continue within the circle of owners.

Nadim El Gabbani, senior managing director at Blackstone responsible for European investments, said in an interview to the Estonian daily Postimees in September that Blackstone will likely exit the investment in four to seven years and will then probably list the financial group on several stock exchanges.

"We are focusing on a long-term strategy. We will not be owners forever, we will leave at some point, this will happen in four to seven years. Our longest investments have lasted for slightly over 10 years," Nadim El Gabbani, senior managing director at Blackstone responsible for European investments, said in an interview to the Estonian daily Postimees.

He said that the most likely exit would be listing the company on several stock exchanges. "I think that before we think about exiting, the main thing is to focus on the activity of the bank," Gabbani emphasized. "Only once that bank is fully independent and its activity is what the management board wants it to be is there point to list. But first we must focus on the activity of the bank," he said.

Blackstone is one of the largest investment firms in the world, managing approximately 440 billion dollars' worth of assets across the world. The company's investment funds are focused on OTC companies, real estate, government bonds, listed companies, non-investment grade bonds, real assets and secondary markets across the world.

Luminor was established as an independent Baltic bank in autumn 2017 built on the Baltic businesses of Nordea and DNB and combining the experience and knowledge from the Nordic countries. Nordea and DNB announced the plans to combine business operations in the Baltic countries in summer 2016. Before the transaction with Blackstone, DNB owned 43.5 percent of Luminor, with Nordea owning the rest of the stake. The bank took over over 930,000 of DNB's customers and 350,000 Nordea customers. Luminor has a total of 3,000 employees and the bank is the third largest in the Baltics. Luminor has over 15 billion euros of assets.