Poland to boost privatisation drive with reported sale of PKO stake

By bne IntelliNews July 18, 2012

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With Poland's privatisation programme struggling due to a lack of interest from investors - or interest from the wrong investors - Warsaw is to give the drive a PLN3bn (€720m) boost on July 18 by springing the sale of a 7% stake in the country's top bank, PKO BP, on the market, media reported sources as saying.

The Treasury Ministry is ready to sell 90m PKO shares, equating to a 7.2% stake in an accelerated book-building, with a 180-day lock-up for the remaining shares, a market source told the PAP news agency on July 17. The unnamed person added that pricing will take place on July 18, and run to 17:00 CET to allow subscription for US investors.

PKO shares closed at PLN33.32 on July 17, which would put the value of the stake at PLN2.998bn (€720m). That will see Poland raise around 30% of the PLN10bn targeted from privatization by the government in 2012, and would double the volume raised so far this year.

The plan for that privatisation target, unveiled in April, has already veered off course, with asset sales - such as the IPO of real estate holding PHN - cancelled due to a lack of interest, provoked in no small part by the poor market sentiment globally, but also uncertainty over the quality of the assets. At the same time, Warsaw last week postponed the sale of its chemicals sector interests in a bid to ward off interest from Russian investors, to whom the government is refusing to sell major assets.

It was suggested by analysts recently that given the current climate, Warsaw may do well to drop attempts to offload such companies, and concentrate instead on hitting its revenue target via its attractive assets in the financial sector - PKO and insurer PZU. That likelihood has been building. Earlier this month, Treasury Minister Mikolaj Budzanowski said state holdings in the pair would be reduced by the end of 2013, with the transactions possible any moment.

The treasury currently holds a 40.99% stake in PKO, with a further 10.25% held by state special-purpose bank BGK. The treasury has said in the past that it could reduce its interest in the bank to a blocking stake of 25%. Poland also plans to reduce its 35.18% stake in PZU, but also refuses to set out its plans in advance because such decisions are sometimes made overnight, Budzanowski said in March.

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