Business & Financial Services
|Sector||Business & Financial Services|
|Investment date||July 2015|
The only serious international banking group focusing exclusively on Southeastern Europe, Addiko Bank serves approximately 800,000 customers via more than 165 branches throughout Slovenia, Croatia, Bosnia and Herzegovina, Serbia and Montenegro.
In December 2009, the Austrian government nationalized Hypo Alpe-Adria-Bank International to keep the bank from collapsing under the weight of more than €13 billion in bad debt.
Ultimately, the Austrian government split the bank into several pieces, including a Balkans banking unit called Hypo Group Alpe Adria A.G. (HGAA).
In July 2015, Advent International agreed to purchase 80% of the Balkans unit, with our partner, the European Bank for Reconstruction and Development (EBRD,) buying the remaining 20%. To symbolize a clean break with the past, the SEE-Network went through a rebranding process and was ultimately renamed as Addiko Bank ("Addiko") in 2016.
In acquiring Addiko, we saw an opportunity to acquire a medium-sized local retail bank with a defensible market position in its core markets of Croatia, Slovenia and Serbia. Looking at the ratio of banking assets to GDP, we recognized that the Southeast Europe region offered good growth potential for the banking sector.
We also recognized that Addiko had the potential to capture significant market share through organic growth and/or acquisitions.
"What gives us the competitive edge is that the five countries where we operate are our home market," explains Ulrich Kissing, CEO of Addiko Bank. "We are not distracted by other markets, and we are agile enough to adjust processes quickly to meet customer needs."
A LOW RISK, HIGH GROWTH STRATEGY
In the negotiations to acquire the bank that ultimately became Addiko, we persuaded the Austrian government to carve out and retain the SEE-Network's non-performing loan (NPL) portfolio. As a result, Addiko started life on solid financial footing.
We believed that Addiko could achieve success without taking on a lot of risk by becoming a cash-flow lender for consumers and offering standardized products to small and medium-sized enterprises (SMEs).
"We focused on speed - delivering fast-cash loans and consolidation loans," says Kissing. "We could see that customers were waiting for these offers because we significantly over-performed our loan origination volume estimates."
With these new products offerings and investments in digital technologies that let customers access banking services anytime from anywhere, Addiko saw growth of new loan disbursements soar 70% on a year-over-year basis.
GREATER EFFICIENCY CONTRIBUTES TO NEW PROFITABILITY
Under Advent's ownership, Addiko moved its headquarters to Vienna and implemented a new, more efficient organizational structure. As a result, the bank saw a 17% year-over-year reduction in run-rate operating expenses.
We also helped Addiko revamp its financial reporting processes to provide more precise information that helps the company's leaders make informed, accurate decisions on the best ways to manage and grow the business.
As the business continued to grow and prosper against the Southern European backdrop, we decided to IPO the business and on July 12, 2019, Addiko Bank AG completed its initial public offering and its shares now trade on the Vienna Stock Exchange.