The FINANCIAL — The Warsaw Stock Exchange is expected to invite key players of the Georgian banking sector to this year’s IPO Summit, which is scheduled for 6-7 June.
Poland’s capital will be hosting several hundred foreign investors interested in the region and the managers of companies planning their IPO on the Warsaw Stock Exchange. For the first time, there will also be one-on-one meetings with board members of Polish blue chip companies listed on the WSE and foreign companies preparing their debut.
The WSE expects the banking sector as well as Georgian Railway and Georgian Oil and Gas Corporation to be listed on the Exchange soon. Representatives of Georgian companies, including Liberty Bank, Bank of Georgia, Wissol, Georgian Railway, and Georgian Oil and Gas Corporation, however, say that they are not interested in the WSE at this moment in time.
Bank of Georgia last year became only the second foreign bank to take a premium listing on the London Stock Exchange. Its global depositary receipts had been traded in London since 2006.
“In 2011 Liberty Bank planned to float on the Warsaw Stock Exchange, and had this IPO taken place, no less than GEL 50 million of additional equity would have been available to the Bank,” Lado Gurgenidze, the Bank’s CEO, told shareholders. “But due to the prevailing market conditions, the Bank was forced to cancel this transaction,” he said.
***
IPO Summit, Warsaw 2013 is a major conference for international investors and companies seeking growth capital in Central and Eastern Europe. The Summit is being organized by the Ministry of Treasury of the Republic of Poland, the Warsaw Stock Exchange and the National Depository for Securities (KDPW), supported by Partners – global and regional financial, legal and advisory firms, and the City of Warsaw.
***
“We are observing ongoing interest in the Polish market from companies operating in Central and Eastern Europe (CEE), Russia and furthermore, also from Georgia,” said Piotr Borowski, Director of the Business Network Development Department. “The WSE’s representatives visit these countries on a regular basis, meeting with various entities interested in the subject of IPO in Warsaw. But their listings depend mostly on improvement of the situation on global capital markets. We believe the WSE is the best choice for Eastern European companies and we will do our best to support decisions to enter our market,” he added.
The Warsaw Stock Exchange is the biggest securities exchange in Central and Eastern Europe. Market capitalisation as of December 2012 was EUR 135 billion, significantly more than other regional centres such as Vienna, Athens or Prague. Altogether 51 foreign companies are listed on the WSE, their countries of origin include Ukraine, the Czech Republic, Israel, Bulgaria and Lithuania.
“Listing on the WSE can give Georgian companies access to the largest institutional investor asset pool in Central and Eastern Europe. Poland has a strong pension fund system and a diversified mutual fund landscape. Additionally, Warsaw Stock Exchange provides a level of visibility to medium-sized companies that cannot be achieved on other European markets, where much larger companies catch the attention of investors,” said Borowski.
“The decision to list is business-driven, and many companies appreciate that the overall cost of listing in Poland, including the services of intermediaries, can be much lower than in Western Europe. Overall we feel, and over 50 foreign issuers from over 20 countries on the WSE seem to confirm, that listing on the WSE is a very effective way of fully benefiting from access to EU capital markets and international investors. And, in comparison with the main European stock exchanges, the WSE is still a relatively young market with high potential for growth,” he added.
“Financing business is one of the key challenges for Georgian entrepreneurs and the high rates of bank loans are a major problem in Georgia,” said Maciej Chrzanowski, Economic Officer at The Embassy of the Republic of Poland in Tbilisi. “For many companies public listing can prove a good solution. It provides cheaper access to long-term capital and allows the attraction of new investors. Credibility and prestige resulting from IPO should not be underestimated either,” he added.
“The Warsaw Stock Exchange provides ‘visibility’ for Georgian issuers. Unlike the biggest exchanges such as London or New York, investors present in Warsaw are focused on emerging Eastern European markets and therefore are naturally more interested in Georgia. Good case studies for potential Georgian issuers are the twelve Ukrainian companies that attracted significant capital via Warsaw during the last few years. Their critical mass made the WSE launch WIG-Ukraine – the first national index in Europe comprising companies originating from Ukraine. As for Poland, with its population of 38 million, it is the largest country in Central Europe and the EU’s sixth economy (PPP-valuation). We are one of the few European economies that did not contract during the economic crisis and prospects for the next years are also positive,” Chrzanowski said.
Generally speaking, a company interested in listing on the WSE Main Market is required to prepare a prospectus which has to be approved by the Polish Financial Supervision Authority; the minimum value of shares to be listed has to be at least EUR 15 million. A company heading for the NewConnect market has to prepare a document of information which is subject to approval by the Warsaw Stock Exchange and there is no minimum requirement of the value of shares to be listed.
The previous government of Georgia intended to develop the Georgian Stock Exchange based on the WSE’s experience. “In the past, the WSE has taken part in various events focused on capital markets which were aimed at representatives of the Georgian administration and private sector doing just that – trying to help the Georgian Stock Exchange to develop. We have participated, for example, together with the Polish Ministry of Treasury in seminars in Tbilisi, where we talked about the structure of the Polish capital market, strategies for international IPOs and the Warsaw Stock Exchange’s own IPO as an example of a transaction of crucial importance for strengthening the Exchange’s position in the region. We also signalled a need to create necessary institutional and legal infrastructure, as well as an effective supervision over the market,” Borowski said.
“Building the capital market is an important component of the economic transformation process. There is already a good base for further cooperation between representatives of Georgia and the WSE. This would help to build a favourable investment climate and foster co-operation between the financial markets,” he added.
Discussion about this post