Now you can invest in LHV’s new subordinated bonds

16. September 2020

Starting from today, the process of subscribing to LHV Group's new subordinated bonds will begin; interested parties will be able to acquire securities until 25 September, and if everything goes according to plan, they will also reach the stock exchange in early October.

LHV Group will be issuing 25,000 subordinated bonds, and if interest is high, then up to 35,000 bonds. One subordinated bond costs EUR 1000, i.e. the maximum amount of money involved is EUR 35 million. The bond bears interest at the rate of 6% and the payments are divided into each quarter. The maturity date for the bonds is in 2030; however, with the permission of the Financial Supervision Authority, LHV may redeem them after five years, at the earliest.

The public offering is intended for Estonian retail investors as well as institutional investors. By acquiring bonds it is possible to help increase the importance of Estonian capital on the domestic financial services and European financial intermediaries market. The raised funds will be used by LHV to increase business volumes and strengthen capital structure; in particular, the additional capital will enable the bank to increase its loan portfolio, which requires sufficient own funds. LHV’s loan volumes are growing quickly, and we are also currently in the process of purchasing Danske Bank’s corporate loan portfolio. With more than 230,000 clients, LHV has grown into the third largest bank in Estonia in terms of daily banking. The Estonian people are holding more than EUR 5 billion in financial assets in LHV.

What should be kept in mind?

A securities account is required in order to purchase bonds, after which a subscription order must be submitted, which can be done by all account manager bank clients. If you are a client of LHV Pank, log in to the Internet bank and subscribe for the bonds electronically.

Subscription will begin at 10.00 on 16 September and end at 16.00 on 25 September. The decision on how the bonds will be distributed will be made on 28 September, and they should arrive in securities accounts on 30 September. The bonds should also become tradable on the Nasdaq Tallinn Stock Exchange on the first day of October.

As was the case with previous LHV bonds, the ten-year bonds can be redeemed by LHV Group after a period of five years, i.e. at the earliest in 2025, if the Financial Supervision Authority grants permission to do so. It would be beneficial for LHV Group to redeem the bonds ahead of schedule, as after five years the importance of the bonds as part of their own funds will start to decrease.

It is definitely worth noting that these are subordinated bonds – i.e. in the case that performance is bad, then in the case of the liquidation or bankruptcy of LHV Group, the claims arising from these bonds will only be satisfied if, for example, loans, liabilities before employees and other similar claims are fully satisfied. This is why the interest rate on subordinated bonds is also higher.

Before investing in LHV bonds, you should definitely take a look at the prospectus for the new bonds, along with the terms and conditions for the offer on the investor.lhv.ee webpage.

LHV Group is the largest domestic financial group and capital provider in Estonia. LHV Group’s key subsidiaries are LHV Pank and LHV Varahaldus. LHV employs more than 480 people. LHV’s banking services are used by more than 231,000 clients, and pension funds managed by LHV have more than 182,000 active clients. LHV’s UK branch offers banking infrastructure to 120 international financial services companies, via which LHV’s payment services reach clients around the world.

The information contained in this notice is not intended to be published, distributed or transmitted, in whole or in part, directly or indirectly, in the United States, Australia, Canada, Hong Kong, Japan, New Zealand, Singapore, South Africa, or in any other country or circumstance where publication, sharing or transmission would be unlawful. Subordinated bond will be publicly offered only in the Republic of Estonia and the sale or offer of the bonds shall not take place in any jurisdiction where such offer, invitation or sale would be unlawful without the exception or qualification of law.

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