bne -

As Warsaw watched its recent IPO of utility Ze Pak flop, officials admitted they may now be forced to shelve the planned float of real estate holding PHN. That suggests a snap sale of a stake in one of the country's blue chips could be on the cards to make up for the revenue shortfall.

Treasury Minister Mikolaj Budzanowski told reporters on October 30 that the government does not now expect to revive the listing of PHN on the Warsaw Stock Exchange - an IPO already delayed earlier this year in the face of apparent indifference from investors. "I think it's more likely that the debut [of PHN] will be moved to 2013," Budzanowski said, according to Reuters.

The postponement is a blow to Budzanowski's ministry, given that less than a month ago the same official had dismissed suggestions that the treasury was struggling to hit its PLN10bn target for privatisation proceeds for the year, insisting that PHN would push it well past the post.

However, even as Budzanowski spoke, another disappointment was being confirmed at the WSE, as Ze Pak followed up last week's IPO of the government's 50% stake at the bottom of its range with losses on its trading debut. As of 1:00pm in Warsaw, trading volume had mustered no more than PLN54m (€13m), and the price was down by 1.15% to PLN25.90, reports FT.com..

The IPO of the utility was the first privatization carried out through the WSE in more than a year. While previous examples - including coal miner JSW and the WSE itself - attracted huge interest, the crisis-riven investment climate meant only 14,000 retail investors and some Polish pension funds sign up. Foreign institutional investors almost completely ignored the sale, which went through towards the very bottom of the pricing range at PLN26.20.

All of which has Budzanowski painting a very different picture than a month ago, when he boasted, after reaping PLN200m from the sale of three small companies, that the treasury felt no pressure at all on meeting its PLN10bn target, which is a vital part of the government's fiscal consolidation drive.

At the time, the privatisation drive had just passed the PLN8bn mark, he announced. He would likely take back his claim that the Ze Pak and PHN sales would finish the job if he could, although it may have been no more than an attempt to save face as the economy ministry - which has the final say on mining assets - had just blocked an attempt to sell off another stake in blue-chip miner JSW.

Back of the envelope calculations suggest the treasury is around PLN1.3bn short following the PLN680m Ze Pak float. Reports say Warsaw was banking on raising PLN800m from the sale.

However, the boasts of coasting over the line always looked a little off the mark, given that a vast chunk of the total raised so far this year - around PLN5.5bn - stemmed from accelerated bookbuildings of two blue chips - PGE and PKO.

Postponing its plan to finally convince investors of the value in PHN's erratic property portfolio this year suggests that without another snap sale from one of the blue chips - another stake in PKO or insurer PZU look the most likely candidates - the treasury will likely be set for a dressing down for piling more pressure on the fiscal position.