Azerbaijan International Bank acquired a controlling stake in Davr Bank for 1.646 trillion soums — approximately $140 million. In May, the deal was valued at around $100 million. We break down what caused the difference.

How the Bank Is Valued

At the final price, the entire bank is valued at approximately 3.23 trillion soums, or $273.6 million. Head of Bankers.uz Ismail Turapov suggests looking at two coefficients.

P/B — the ratio of value to capital. With equity capital of 2.4 trillion soums for the first half of the year, the indicator is approximately 1.35.

P/E — the ratio of value to profit. With 2025 profit of 631.5 billion soums, the bank is valued at approximately five years of annual profit.

Return on equity stands at 28−30%, according to S&P — 35.6% for 2025. The combination of high profitability with profit growth gives the expert grounds to consider the valuation fair.

Control Premium

The key element explaining the valuation gap. By purchasing a controlling stake, an investor gains not a proportional share of profits, but the ability to determine strategy and form governing bodies.

Turapov estimates the control premium at $35−40 million. Without it, the stake value would be around $105−110 million — close to the initial valuation.

For emerging markets, the premium typically ranges from 20−40%. In this deal, it fits within that range.

Head of the Legal Department at RÖDL Shahram Sadullaev adds: the price could have been influenced by financial and legal due diligence results, asset and liability quality, and the buyer's plans for further capitalization.

Discount for Low Liquidity

A reverse factor that local market investors should know about. According to Turapov's calculation, excluding the control premium and applying a 15−25% discount for low liquidity of shares on the Tashkent exchange, the stake value could have been $85−100 million.

In other words, limited liquidity of the local platform reduces asset valuation by a quarter — this is the price the market pays for insufficient depth.

Why the Buyer Needs an Uzbek Bank

The deal became the first major foreign investment by the Azerbaijani bank outside its country.

Managing Partner of GK&P Yodgor Gafurov links it to broader rapprochement between the two states: from creating a Supreme Interstate Council to a treaty on allied relations and a cooperation roadmap.

The practical logic is simpler: acquiring an operating bank provides ready infrastructure instead of launching a business from scratch. The acquired asset has over 2 million clients, 43 service points, and assets exceeding $1 billion.

Ready Corporate Base

An additional factor is Azerbaijani companies already operating in the republic: SOCAR, AzerGold, NEQSOL, PASHA, and others.

For the new owner, these are potential corporate clients: transaction settlement, trade financing, investment project support.

A separate direction is settlements within transport routes across the Caspian and the Middle Corridor.

What Changes in the Market

Experts agree on one thing: don't expect automatic rate cuts.

«The mere fact of a foreign owner's appearance does not mean credit rates will drop sharply. Lending costs depend on central bank monetary policy, inflation, and funding costs», notes Turapov.

However, cheaper and longer-term funding from a strategic investor can gradually intensify competition.

Competition Will Shift to Service

According to the expert, the main competitive battlefield will be customer experience: digital channels, credit decision speed, small and medium business products.

«If a customer can get credit faster or solve an issue through an app, that becomes a competitive advantage», says Turapov.

For smaller banks, this is an incentive to find specialization. Participants that are technologically behind and lack clear niche must change their business model or consider consolidation.

In market structure context: nine state banks control over 60% of assets. The appearance of a major foreign owner in a private bank strengthens the non-state segment.

What's Next With Shares

In August, trading in the bank's shares resumed on the exchange after a five-year break — they trade under ticker DRBK.

Turapov allows for a hybrid scenario: first, control goes to a strategic investor, then the remaining shares are placed on the public market.

«For Davr Bank, a hybrid model could be interesting: first selling the controlling stake to a strategic investor, then placing the remaining share on the market», the expert believes.

Further dynamics will depend on the bank's performance after the ownership change. Investors tracking share prices should focus on reports after integration is complete.

This material is informational in nature and is not an investment recommendation.