Poland turbocharges privatisation drive with PKO sale

By bne IntelliNews January 23, 2013

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Poland is set to wrap up an accelerated book build for an 11.75% stake in the country's biggest bank, PKO Bank Polski on January 23, as the treasury pushes to fulfill its 2013 target for privatisation revenue at one fell swoop.

Warsaw is seeking a price of PLN5.3bn (€1.27bn) for the 147m shares it is offering in PKO, according to Reuters, which cited unnamed market sources on January 22. Rzeczpospolita reports that the transaction is set to close today, and notes that following the news, PKO shares dropped 1.3% to PLN35.3 into the January 22 close. That still sees the proposed selling price around 3% lower, according to analysts at Equilor.

The treasury ministry has made no comment, but reports claim that it will reduce its stake in PKO by 1.5%, to leave it holding 31.9%. State-owned BGK bank said it will sell all of its 10.25% stake in PKO. The institutional investors buying the shares will have to agree on a 180-day lock up in a bid to ward off further damage to PKO's price.

A similar sale of a 7% stake in PKO last year provoked an overhang regarding the stock, point out Equilor analysts. "Yesterday's weakness in CE3 banking shares could have been partially driven by [the] transaction, [and] we expect further pressure as investors allocate and shift money to this SPO."

The sale of the stake in the blue-chip bank appears designed to get the 2013 privatisation programme, which targets PLN5bn in revenue, off with a bang. That would allow the treasury plenty of room for maneuver on other sales through the year.

It may well need it. Warsaw said last week that it planned to open the year with another attempt to sell real estate holding PHN, after failing twice in 2012. In a separate report on January 22, Reuters quotes market sources which say that the bookrunners value the company at an PLN870m-1.7bn - well below the PLN2.5bn PHN claims its assets are worth.

In fact, with confidence on the markets less than robust, Poland has struggled for the past two years to meet its privatisation targets, with a host of offers either pulled entirely, or struggling to hit their revenue targets, due to low interest.

It's notable that of the PLN9bn raised in 2012, a full PLN5.5bn came from two snap sales of stakes in bluechips - one by the country's top utility PGE, as well as the 7% in PKO. Had the treasury felt itself under pressure to hit its PLN10bn target for the year, it would likely have released a further PKO stake. However, the plan announced in November to use stakes in state companies as the basis for a new infrastructure fund appeared to alter the privatization strategy somewhat.

With another PKO stake out of the door, and Warsaw left holding just under 32%, that appears to leave PZU as the next bluechip likely to come to market. The sale of a stake in the country's biggest insurer was announced to be part of the government's privatisation plan for 2012-13, with Warsaw suggesting it could reduce its 35% holding by 10%.

The government has discussed a similar 25% target for the eventual state stake in PKO, and has said it wants to sell some shares to domestic retail investors. That suggests any further divestment of the bank by the state would take place on the Warsaw Stock Exchange.

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