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The Warsaw Voice » Business » January 16, 2008
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100 Days of NewConnect
January 16, 2008   
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NewConnect, the Warsaw Stock Exchange's alternative market for small and medium-sized companies with high growth potential, is more than 100 days old. The market was launched Aug. 30 last year as an alternative trading system similar to London's Alternative Investment Market (AIM) and the U.S. Nasdaq.

NewConnect is targeted at both institutional and individual investors interested in higher-risk investments offering above-average profits. Companies listed here must have major potential for growth and are expected to represent innovative sectors such as IT, electronic media, telecommunications, biotechnology, environmental protection, alternative energy and modern services, as well as traditional industries.

There are now 25 companies listed on NewConnect, with a total capitalization of around zl.1.2 billion. A number of new listings is planned this year.

There are several groups of companies among those listed on NewConnect. The largest group comprises 10 new technology companies representing industries such as the internet, the media, IT, and telecommunications. Eight companies represent the service industry, including various consulting firms and companies investing in venture capital. A further seven companies represent real estate, construction and traditional industries.

Twenty-three of the 25 companies listed on NewConnect have sold their shares through private placements, raising a total of almost zl.160 million. Private placements are a new way of raising capital on the Polish capital market, permitted under regulations governing NewConnect's operations. Such an initial offering is carried out as a non-public issue on the basis of a special information document-a simplified prospectus-prepared and approved by an authorized adviser. The offering may be addressed to a maximum 99 investors. To date the WSE has approved 94 entities to act as authorized advisors. These include various advisory and auditing companies as well as law firms and brokerages.

Only two issuers have opted for an initial public offering (IPO) on the basis of a standard prospectus approved by the Financial Supervision Authority. In such a case, an offering on NewConnect does not basically differ from an IPO on the WSE's main market.

The first 100 days of NewConnect proved that there are investors interested in this market, both institutional and individual, who accept a higher investment risk in exchange for a potentially higher profit-regardless of industry or the stage of business development. This means that NewConnect stands a chance of becoming a significant part of Central and Eastern Europe's financial market, especially as more than 100 companies are expected to be listed on NewConnect by the end of 2008.

Władysław Halbersztadt
Investin, CEO
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