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The Warsaw Voice » Business » October 29, 2010
WSE Shares to Be Floated
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WSE Shares to Be Floated
October 29, 2010   
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Shares in the Warsaw Stock Exchange (WSE) will be floated on the Warsaw floor in November in another large transaction by the Treasury Ministry after the IPOs earlier this year of the insurance company PZU and energy groups Tauron and PGE.

“The debut of the Warsaw Stock Exchange will be the culmination of the economic changes which have been going on in Poland for 20 years,” Treasury Minister Aleksander Grad told a news conference in mid-October. “I think that interest in WSE will be large, especially as there will never be another offering of this kind in Poland, because it is very attractive and we will not be floating an exchange again.”

Ludwik Sobolewski, president of the WSE, said its IPO is one of the most important developments in the history of the Polish capital market. “Investors have an opportunity to become shareholders in the largest national exchange for financial instruments in Central and Eastern Europe, an exchange which runs several markets and has the fastest development and growth rate in Europe,” Sobolewski said.

The Treasury Ministry, as WSE’s majority shareholder, will offer over 26.7 million shares, or 64 percent of all shares. According to the prospectus, retail investors will be offered from 25 to 30 percent of the WSE shares that are to be sold. The remainder have been set aside for institutional investors. The subscription quota is set at 10 to 100 shares per retail investor. The prospectus sets the maximum price per share at zl.43.

“We have a very responsible approach to ownership changes in the most important company in our economy,” Grad said. “WSE’s floatation and its strategic partnership with the U.S. exchange NYSE Euronext will result in even higher standards and management efficiency while the Treasury will remain WSE’s strategic investor, taking care of its development and supporting measures aimed at strengthening its position as a financial hub for Central and Eastern Europe.”

The IPO scheme does not include plans for the sale of WSE stock to investors operating in the stock market sector. “There was a time when we tried to select an investor for the exchange. We set tough conditions then. Now, I can see no reason why another exchange should take over WSE shares in this process.”

Last year, Deutsche Boerse was interested in buying a majority stake in WSE. But the Treasury Ministry was not satisfied with its offer and asked Deutsche Boerse to supplement it with non-price commitments, including a detailed program for the development of WSE and the promise to strengthen WSE’s position in Central and Eastern Europe. Deutsche Boerse declined, the deal fell through and the ministry had to prepare a new strategy for WSE’s privatization.

WSE’s position on the European capital market should become stronger after its privatization. An important factor behind WSE’s privatization is that it is much more difficult for a state-owned stock exchange to enter into strategic alliances. Each of the important European exchanges which are considered possible alliance partners are privately owned.

Data for the first half of the year released by the Federation of European Securities Exchanges (FESE) show that WSE’s advantage is growing over the other stock markets in Central, Eastern and Southern Europe. The value of domestic companies listed on the Warsaw exchange is 115 billion euros, 55 percent higher than on the Vienna exchange and twice as high as the Athens exchange. And CEE SEG Group’s advantage over the Warsaw exchange in terms of capitalization is increasingly small. The capitalization of the group, which is made up of the Vienna, Prague, Ljubljana and Budapest exchanges, was 31 billion euros higher than that of WSE in April but only 19 billion euros higher at the end of June. Turnover on WSE is also growing steadily. In the first half of the year, the value of shares traded on the Warsaw floor was 28 percent higher than in Athens and 37 percent higher than in Vienna.

The WSE’s high position on the European IPO market provides more proof of its growing attractiveness. In the third quarter of 2010, the Warsaw floor ranked first in Europe in terms of the number of IPOs and fourth in terms of IPO value, according to the latest IPO Watch Europe report published by PricewaterhouseCoopers. In the period from July to September, 32 companies debuted on the Warsaw floor—three on the main market and 29 on the NewConnect market. The total value of IPOs was 60 million euros in the third quarter and 3.15 billion euros in the second quarter.

The high IPO value in the second quarter was mainly due to the privatization of two large companies controlled by the state—PZU and Tauron Polska Energia. Their IPOs had a combined value of almost 3.02 billion euros. They were respectively the first and fourth largest IPOs in Europe in this period.

WSE’s partnership with NYSE Euronext may be helpful in building a strong position for the Warsaw floor in Central and Eastern Europe. NYSE Euronext and the Warsaw Stock Exchange announced in mid-July the establishment of a strategic, long-term cooperation agreement covering the development of mutually beneficial business initiatives and the migration of the WSE transaction platform to the NYSE Technologies Universal Trading Platform. The partnership may assist greatly in WSE’s development because NYSE Euronext is a leading global operator of financial markets and provider of innovative trading technologies.

Duncan L. Niederauer, CEO of NYSE Euronext, who paid a working visit to the WSE in September, said there was more to NYSE’s cooperation with the Warsaw floor than just the sale of world-class technology. The use of the modern platform means wider access to investors for the WSE. “As a result, our clients may treat the Warsaw exchange as a center for investment in the region,” Niederauer said.
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