Multitude has increased its stake in Lea Bank to 20.9%, slightly exceeding its initial plan of acquiring 18.6% (9.9% last year plus a planned 8.7%). However, the news was largely expected and neutral in our view. We will make the minor estimate changes after the Q4 result at the latest.  

The acquired stake was slightly bigger than we originally expected

Originally, Multitude acquired 9.9% and intended to buy another 8.7% stake (18.6 % in total), which was subject to the approval of the Swedish Financial Authority. Now, the company has received the required approvals and made five additional share purchase agreements. The acquired stake eventually rose to 20.9% in total.

Strategic partnership and financial investment

The minority investment is part of Multitude’s M&A strategy, where one pillar is to look for targets where the company can enter new business areas and partnerships. The investment in Lea Bank is significant for Multitude since we estimate the total investment in Lea Bank will be in the range of 15-20 MEUR (depending on the share price of the separate batches).

With the minority stake, Multitude gains more exposure to higher quality loan assets (Prime Loans), where Lea Bank is relatively stronger than Multitude. With the deal, Multitude aims to create opportunities for strategic cooperation and synergies in the future. We believe concrete plans regarding these are not yet clear and we expect to hear more about them in the future. In addition to the complementary products and potential strategic cooperation, Multitude sees Lea Bank as a financial investment. The company sees that Lea Bank’s stock forms "attractive returns in terms of dividend yield and income from the associated company".