Published: November 10, 2009
PGE, the Polish electricity utility, has raised PLN5.9bn (US$2.1bn) through the flotation of a 15% stake on the Warsaw Stock Exchange, the biggest IPO in Europe this year.
The deal, priced on Wednesday October 28, was priced at PLN23, at the top of pre-pricing talk, and in line with analysts' estimates. The offer was lead managed by Goldman Sachs and UniCredit, and was around seven times oversubscribed.
Christian Steffens, global head of equity capital markets at UniCredit, says: "There was a good mix of international and Polish investors, though at the top of the range Polish investors dominated. Because of PGE's weighting in Polish indices, it is a must-have stock for local funds."
Just a day later, on October 29, UniCredit also lead-managed a PLN5bn (US$1.7bn) rights offer for PKO, a state-owned bank. Bank of America Merrill Lynch was also lead manager for the deal.
Steffens of UniCredit says: "The two deals indicate that there's a strong appetite for equity still out there. The PKO rights issue enjoyed an initial 99.16% take up with the remainder taken up by over-subscription, while the PGE deal was priced at the top of the range. It shows that there are still a lot of institutional investors who are underweight in equities, and who missed the rally and are trying to catch up. The success of the deals also show that CEE capital markets are alive and well."
The success of the two deals will give hope to the Polish government, which is looking to raise PLN36.7bn (US$12.8bn) through privatisations by the end of 2010, to try and reduce its public debt level and budget deficit. It hopes to sell a 15% stake in PGE in the first half of next year.
So far, the privatisation programme has had mixed success. State-owned coal producer Lubelski Wegiel Bogdanka listed in June and has seen its stock price rise by 54% since. However, the sale of a stake in energy company Enea has been delayed after lead bidder RWE pulled out of the sale, and the sale of the government's 51% stake in the Warsaw Stock Exchange has also been delayed until November.