Page 12 - bne_Tech_01_2021

Fintech & E-commerce
January 2021 www.intellinews.com I Page 12
Founder Tinkov converts voting shares in Russian TCS banking group
Tinkov Family Trust converted 69.9mn Class B shares (with 10 votes per share) in TCS Group into Class A shares (each share with one vote), thus equalising founder Oleg Tinkov's voting share with an economic stake of 35% (down from 84% before the conversion).
As reported by bne IntelliNews, in December 2020 Tinkov sold 10.7mn shares in TCS Group, or 5.3% of the capital, in an accelerated book-building (ABB).
Previously in November the top management of TCS Group selling their shares was seen
as negative by the analysts. The ABB of the Tinkov family trust was seen as neutral for TCS’ investment case, given the size, and supportive for liquidity.
In the meantime, the most recent conversion
of the Class B shares was welcomed. It implies equal voting rights for all shareholders, with free-float representing a 58.5% voting share, improving TCS’ corporate governance, BCS Global Markets commented on January 7. Prior to the conversion the free-float represented only 14% of the voting stake.
Thus BCS GM sees the news as positive and affirmed the Hold recommendation on TCS shares with a target price of $31 per global depository receipt and RUB2,400 ($32.4) per share.
In 2020 Russian internet major Yandex has called off the $5.5bn deal to acquire Russia's only pure
online bank and an investor darling, Tinkoff Bank, controlled by TCS.
"We think the recent surprise move by Oleg Tinkov to convert his super-voting Class B shares into single-vote Class A shares is a highly positive corporate governance step, one that both removes a long-held bugbear of existing minority shareholders and ticks a key box in terms of bringing potential new investors into the stock," Sberbank CIB commented on January 11.
Although the market and the analysts were inspired by a possible deal, TCS was still seen as having strong standalone potential of building up the business further, and the banking group reported solid 3Q20 results.
Sberbank CIB analysts believe that the ultimately unsuccessful Yandex deal highlighted both how undervalued TCS stock was then, instilling a
new focus on boosting the market cap, and the limitations of the dual share class model.
"This simple step [of share conversion] removes any risk that the founder could use his super- voting rights to force an unwanted sale on minorities, and aligns all shareholders' interests – with the result of already adding over $1bn to the market cap, and $400mn to the value of Tinkov's stake," Sberbank CIB stressed.