Guy Norton in Zagreb -

The acquisitive Vienna Stock Exchange is mulling a possible bid for a stake in Zagreb Stock Exchange, a move that would further boost its claim to be the leading bourse for those investors looking for exposure to Central and Eastern Europe.

Vienna Stock Exchange spokesperson Beatrix Exinger told bne that there hadn't been any formal discussions about a potential takeover offer of the Croatian exchange, but added: "Generally we are interested in making strategic investments in exchanges throughout the entire Central and Eastern European region and that would naturally include the Zagreb Stock Exchange as well, but there have been no detailed talks as yet."

In the past 12 months, the Viennese group has strengthened its hand in emerging Europe considerably, securing controlling stakes in the bourses in the Czech Republic, Hungary and Slovenia.

In common with its counterparts in the rest of CEE, the Zagreb exchange attracted growing investor demand from both home and abroad in the pre-credit crunch period, especially for landmark IPOs by the likes of oil and gas group Ina and telecommunications operator T-HT Group. But it suffered a sharp sell-off last year, with its market capitalization slumping from the equivalent of €53bn at the end of 2007 to just €19bn at the end of 2008. Growing concerns about the possibility of a devaluation of the Croatian kuna have further hit market sentiment this year, leading to speculation that a number of Croatian brokerages would be willing to sell their stakes in the Zagreb bourse.

But while some brokers may be looking to monetise their holdings to overcome short-term financial difficulties, Michael Glazer, director of investment banking boutique Aucris, says that for the vast majority of equity houses in Croatia, there is also a longer-term agenda to be considered. "Having an international partner such as Wiener Börse would not only help to improve the professionalism of the Zagreb Stock Exchange, but of the whole capital markets industry in Croatia."

Daniel Nevidal, managing director of leading Croatian brokerage house InterCapital agrees. "We believe it's good for the Zagreb Stock Exchange to look for a strong partner that can develop it further, boosting its know-how and marketing reach." He adds however that if InterCapital were to sell its holding, any potential partner would need to demonstrate a strong commitment to Croatia and not seek to merely divert trading from Zagreb to its own home market.

Wiener Börse is not the only potential suitor, however. According to Croatian business Poslovni dnevnik, Ante Samodol, head of the country's financial market regulator Hanfa, would prefer to see a link-up with the Warsaw Stock Exchange, arguing that Austrian banks have an overweening influence in Croatia.

Meanwhile, Zagreb already has an existing relationship with the Nasdaq OMX Group, the world's largest exchange operator, with which it has signed agreements on trading systems technology and the development of derivatives.

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