The French co-operative bank Crédit Mutuel Alliance Fédérale is taking over Oldenburgische Landesbank (OLB) via its subsidiary Targo Deutschland. The previous owners of OLB, led by US private equity firm Apollo, decided against an IPO, which had been rumoured for several years.

There had been speculation about an IPO coming in April. Plans for an IPO fell through in 2022 and 2023 due to weak market conditions. Increasing volatility in the stock market may now have tipped the scales in favour of abandoning the latest IPO plans. The owners did not comment on the sale price or the reasons for the decision to sell to Crédit Mutuel.

For Crédit Mutuel, this is the largest acquisition since the 2008 takeover of Citibank Deutschland, which was subsequently renamed Targobank. Eric Petitgrand, CEO of Crédit Mutuel Alliance Fédérale, put the purchase price at less than 2 billion euros. For CMAF, the OLB takeover is similar in size to the acquisition of CIC (Crédit Industriel et Commercial) in 1998, the oldest custodian bank in France.

Compared to the other French banks, the cooperative group, which consists of various regional associations and is managed from Strasbourg, is primarily focused on France following the sale of a Spanish subsidiary, with Germany as its second most important market. To date, its international activities account for just 20%.

The combined total assets of Targobank and OLB amount to 79 billion euros. This puts them among the ten largest private commercial banks in Germany.

CMAF CEO Daniel Baal told business radio station BFM Business that Germany is a natural place for the bank to do business, hence the desire to strengthen its presence here. CMAF is said to have been on the lookout for a suitable takeover target in Germany for several months. If he had had to make a tender for a target, it would have contained all the characteristics of OLB, said Baal.

OLB and Targobank will complement each other well, as Targobank is particularly strong in loans, while OLB is a universal bank that is strong in both retail banking and corporate financing. There is also the insurance subsidiary ACM Deutschland. Insurance activities play a central role in the cooperative bank's latest strategic plan, as does the expansion of corporate and investment banking. With the takeover of OLB, there is now increasingly focussing on medium-sized companies in Germany.

For the previous owners led by Apollo, the sale provided the opportunity for a lucrative exit. In contrast to the alternative IPO route, the financial investors will get rid of the holding in one fell swoop after seven years, instead of gradually selling the shares on the stock exchange.

Apollo acquired 90% of OLB shares from Allianz in 2018, together with partners Teacher Retirement System of Texas (TRS) and Grovepoint Capital, for around EUR 500 million. They are estimated to have almost quadrupled their original investment.

For the IPO market, the lack of an OLB IPO is a further setback after the cancellation of the Stada IPO. OLB would have been the first IPO in Germany since the scientific publisher Springer Nature from the BC Partners portfolio last October. The IPO slump is also continuing across Europe. Only half a dozen companies have gone public this year, half of which have seen their share prices fall since their debut, such as the Spanish B2B hotel beds broker HBX Group, owned by Cinven and EQT, which has seen its share price fall by 7%, the largest IPO in Western Europe so far this year.