VAB sale paves way for Ukrainian MBOs

Author: | Published: 28 Feb 2011

A rare management buyout (MBO) in Ukraine’s banking sector was structured as a two-step sale to meet capitalisation requirements that took effect during the sale process. This called for escrow arrangements – a concept not recognised by Ukrainian law.

TBIF Financial Services decided to sell its controlling stake in VAB Bank last year. But the target was required to increase its charter capital by January 1 – before any sale would receive the regulatory approvals needed to close.

TBIF was reluctant to fund the capital increase of a bank it was about to exit, so lawyers arranged for TBIF to subscribe for the new shares, but for the buyers to prepay into escrow the UAH 550 million (?51 million)...