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The Warsaw Voice » Business » November 30, 2010
Business & Economy
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WSE Floatation Proves a Hit
November 30, 2010   
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The privatization of the Warsaw Stock Exchange (WSE) has proved a major success, attracting huge interest from both Polish and foreign investors. Shareholders saw the value of their stock shoot up at the first trading session.

The WSE’s debut Nov. 9 saw the price per share open at zl.50.75, up 18 percent on the issue price. And at the end of the first trading session, the price per share was up to 25 percent higher than the issue price. But there was more to the success of the IPO than the successful stock market debut. The IPO attracted record interest from retail investors, who placed a total of 323,000 orders for WSE shares, as well as Polish and global institutions, which ordered 25 times more shares than the number set aside for them.

“It was an unprecedented transaction that ended in an unprecedented success,” said Ludwik Sobolewski, president of the WSE, at the opening session.

The WSE’s floatation also has a symbolic meaning. “The debut of the Warsaw Stock Exchange is a development that crowns the economic changes which have been going on in Poland for 20 years,” said Treasury Minister Aleksander Grad. For many Poles, the WSE became a synonym for a market economy in 1991 when it was set up. It created an opportunity for companies to acquire money for expansion and raise their equity. Since its inception, the WSE has also played an important educational role. Thousands of Poles learned the ropes of a market economy through investment on the stock exchange.

“The establishment of the Warsaw exchange meant the fulfillment of dreams of many people,” Prime Minister Donald Tusk said at the WSE debut ceremony. “In the modern Poland, the stock exchange has become a symbol of freedom and a symbol of Poland’s proud economy. The stock exchange has also become an institution setting the highest standards and a symbol of the Polish people’s slowly emerging confidence in a free economy. Our assessment that the WSE has a future as a reliable and important hub in this part of Europe is realistic and ambitious.”

Grad also voiced his belief that a regional financial hub will be developed in Warsaw. “Privatization through the stock market and efforts to build the strength of capital markets contribute to Warsaw’s strength as a financial hub for this part of Europe,” Grad said. “The WSE’s debut is a huge success for investors and the stock exchange, a historic day and a very important development for our capital markets.”

Małgorzata Starczewska-Krzysztoszek, chief economist at the Lewiatan Polish Confederation of Private Employers, said, “By entering the stock market, the WSE found itself in a different world. It made a big step forward in building a financial hub for Central and Eastern Europe in Warsaw. It is on the Warsaw trading floor that companies from our region will be increasingly raising capital, having their value appraised and raising their profile on the European market.”

Today, the WSE is already a major player on the European capital market. Data by the Federation of European Securities Exchanges (FESE) shows that the value of companies listed on the Warsaw exchange halfway through the year stood at 115 billion euros and was 55 percent higher than the value of companies listed in Vienna and more than two times higher than the value of companies listed in Athens. Turnover on the Warsaw floor is increasingly high. In the first half of the year, the value of shares traded on the WSE was 28 percent higher than in Athens and 37 percent higher than in Vienna.

The high position of the WSE on the European IPO market is another proof of its growing attractiveness. In the third quarter of 2010, the Warsaw exchange ranked first in Europe in terms of the number of IPOs and fourth in terms of IPO value, according to the IPO Watch Europe report by the PricewaterhouseCoopers company. In the period from July to September, 32 new companies were listed on the Warsaw floor—three on the main market and 29 on the NewConnect market.

But the best proof of the strength and attractiveness of the Polish market is the huge interest in the WSE’s shares among institutional investors, with demand for the shares more than 25 times higher than supply. Leading financial institutions from almost 30 countries on five continents—including pension and investment funds, sovereign wealth funds, mutual funds and university funds—placed orders for the shares.

One important factor behind the WSE’s privatization was that it was far more difficult for a state-owned stock exchange to enter into strategic alliances. Each of the European exchanges which are being taken into account as potential partners for the WSE is a privately-run exchange. Under the previous privatization strategy, shares in the Warsaw exchange were to be sold to a strategic investor. Last year, Deutsche Boerse was interested in buying a majority stake in the WSE. But the Treasury Ministry was not satisfied with its offer and the deal was not finalized. Now the WSE will be able to independently decide about its strategic alliances. More than 26.7 million shares, or 64 percent of the WSE’s total stock, was offered for sale in the IPO. Retail investors bought 30 percent of the shares and the remaining shares went to institutional investors. The state retained a 35-percent controlling interest in the WSE as its strategic investor responsible for the WSE’s expansion and strengthening its position in Europe.
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