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Czech, Journalism, Marketing, Media, Prague, Publication, Publicity, Warsaw
Czech firms willing to step on the alternative trading system NewConnect of the Warsaw Stock Exchange (WSE) could enjoy free marketing these days.
WSE, which is preparing its own initial public offering (IPO) that will take place in mid-November this year, has done a roadshow in Prague on June 21, 2010. The exchange emphasized its strong sides and put an accent on its outstanding figures. In 2009, WSE was the second largest European exchange by the value of its IPOs. It registered 16 IPOs valued at €1.4 billion, compared to 23 IPOs a year ago, raising € 555 million. The first player was the NYSE Euronext that led on IPO value with 13 IPOs raising €1.9 billion. The third European exchange by the value of IPOs was the London Stock Exchange (LSE).
WSE is thus the largest stock exchange in Central and Eastern Europe (CEE). Its growth has been recently fueled by the decision of the Polish government to start selling stakes in key state-owned assets such as the largest Polish insurer PZU or the power producer Tauron through WSE. The PZU listing, valued at roughly 8 billion zloty (€ 1.98 billion), was over-subscribed nine times and it was one of the largest IPOs in Europe this year.
In the Czech Republic, one of the companies queuing to be listed in Warsaw is Invia.Cz, the largest Czech online travel agency. Invia.Cz aims to be listed on the WSE main trading platform. The IPO should be done by mid-2011, according to Michal Drozd, Invia.Cz CEO. The company doesn’t exclude the possibility of a double listing in Warsaw and Prague. However, this hasn’t been yet decided. If agreed, it would be done because of pure marketing reasons. “We are active in the Czech Republic, Poland, Slovakia, Hungary and Romania and we could use the marketing tied to the IPO to boost out image on these markets. When you’re publicly listed, any good news gets straight on the TV screens – same like any bad news,” he said.
Another local company that stepped on the WSE alternative trading system NewConnect is the integrated solar energy development company Photon Energy. The company, which focuses on generating solar power, is now preparing to step on the WSE main trading platform. This will be done by the end of September 2010, said Georg Hotar, chief financial officer (CFO) with Photon Energy.
Czech companies are taken to Warsaw by Cyrrus, a Brno, Central Moravia, based brokerage. Jan Procházka, a director and senior analyst with Cyrrus said that Czech companies have an interest in NewConnect, but they aren’t queuing for the platform as they do in Poland. “We do have a couple of companies in the pipeline, but it’s not a huge number like in Poland, where there are 50 companies waiting in line to be accepted on NewConnect,” he said. One of the reasons why it’s not possible to list more Czech companies on NewConnect is the financial situation of these companies. “They need to make sure they’re perfectly healthy, financially speaking, and that they have a bullet-proof business story to tell, otherwise we won’t accept them for the public listing,” Procházka said.
On the other hand, publicity is one of the major advantages a company gets when stepping on NewConnect. Critics of the WSE non-regulated alternative platform point at the fact that, after being listed, companies lie down with no one trading on their stocks. “It’s true that we don’t have the same level of trading on NewConnect as on the regulated platforms, but this is natural, given the criteria [a company must fulfill to be present on] NewConnect,” said Ludwig Sobolewski, head of WSE. This regards the size of the company – usually medium-size enterprises – and the volume available for free-float, which is usually 20 to 30 percent of the company value. “At these parameters, the trading volume is a decent one,” Sobolewski said. “Those companies that are successful get ready to step on the main platform,” he added, pointing at the fact that there are currently 14 such firms waiting to step onto the main platform from NewConnect.
If alternative trading really works, then why don’t we have such a platform in Prague? “It’s quite expensive,” said a source that declined to be named. “The Prague Stock Exchange (PSE) was too busy with being bought by the Vienna Stock Exchange (WB) and had all interests to keep costs down. So, PSE didn’t have a direct interest to develop such a platform that would bring returns only after some three years of investments,” the source said. Even if it doesn’t make sense for PSE, being publicly listed on an alternative platform may make sense for many a small and medium-sized company. “They get free marketing and they learn how to be more transparent. Practically, they get ready for stepping on a regular trading platform. And that is good for many of them,” the source said.
