Poland plans huge sell off on WSE

By bne IntelliNews March 28, 2012

Tim Gosling in Prague -

Eyeing the continued improvement on the markets, Warsaw is ready to unleash a privatisation drive aimed at selling stakes in up to 300 companies in 2012-2013. The rush to market will clearly need to be carefully timed however.

With market sentiment in Europe bobbing atop the liquidity released by the European Central Bank, the Polish government is licking its lips, hoping to get away a host of privatisations held up by the crisis, as well as releasing hundreds of new stakes.

The Treasury is reportedly hoping to offload as many as 85% of the stakes it holds, mostly on the public markets, but will maintain operational control over at least 49 "strategic" enterprises. Treasury Ministry spokeswoman Magdalena Kobos said that the country owns around PLN100bn (€24bn) worth of companies across various sectors, reports Dow Jones.

The privatization drive is a central plank in Warsaw's ambition to squeeze the budget deficit to below 3% and reduce the level of state debt. The 2012 fiscal plan aims to raise PLN10bn (€2.4bn) through the sale of state assets. That figure looked extremely hopeful when it was set late in 2011, after a number of privatizations were hit by the fears emerging from the debt crisis and cancelled last year, although Warsaw still managed to raise PLN13.1bn in 2011.

Now, however, Poland hopes to push through the sales, and is targeting a grand total of PLN15bn in 2012-13. According to the plan, the Treasury intends to sell a significant number of its stakes in Warsaw Stock Exchange-listed giants, including coal miner JSW, top utility PGE, the country's biggest bank PKO, and insurer PZU. However, final decisions will be made based on specific market conditions, and no firm dates have been set.

Several IPOs are also planned. For example, 2013 could see a public offering of defence company Bumar, whilst the mining sector is likely to see a huge sell off. The CEO of Weglokoks said on March 27 that up to 40% of the coal trader is due to list in the fourth quarter, however with Poland's largest coal companies Kompania Weglowa and Katowicki Holding Weglowy also included in the plan - and JSW and Bogdanka already on the WSE - that looks a challenging schedule to achieve, especially on a market that is still shaky.

Utilities is another sector earmarked for huge issuance. Treasury Minister Mikolaj Budzanowski said in December that utility ZE PAK is likely to appear on the Warsaw bourse, whilst plans to float Energa, Enea and hydropower firm ZEW Niedzica are also in the pipeline, to add to the intended boost to PGE's freefloat.

The government has been fighting a year-long battle with the country's competition watchdog to merge Energa with PGE, with a union with Enea a supposed back up plan. If the market allows the government to get a reasonable proportion of these sales away, it will reduce the likelihood of more "pseudo privatisations" - a particular Polish specialty by which state assets are sold off to state-controlled companies.

Both Energa and Enea were left off the list of 49 strategic companies, suggesting they could be sold in their entirety. However, fellow utilities PGE and Tauron joined other energy companies such as PKN Orlen and PGNiG in having that designation applied. That will see the state maintain a controlling interest, with the companies' role in Poland's bid to increase energy independence having been clearly stated.

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