Polish portal looks to banish gloom on Warsaw bourse

By bne IntelliNews March 11, 2015

bne IntelliNews -


Despite subdued valuations on the Warsaw Stock Exchange - as on other equities markets in the region - one area that could experience increased activity is the Polish media and IT sector, market players claim. 

"Now is very positive for tech internet IPOs in Western Europe and the US, and I expect this trend to accelerate also on the Warsaw Stock Exchange," private equity MCI Management's Tomasz Czechowicz told bne IntelliNews. Czechowicz said on March 10 that MCI would partially exit Wirtualna Polska (Wp.pl) should it list in Warsaw, as is expected in the coming weeks. 

"The situation on the stock market suggests that such an offer may be successful in Poland," he said, according to Reuters. He claimed Poland's biggest web portal is potentially worth more than PLN1bn (€241mn).

Investment activity plunged on Poland's stock exchange, the largest in Central Europe, in 2014 because of changes in rules affecting pension funds, the biggest players on the bourse, as well the impact of the crisis in Ukraine. The market's turnover shrank 11% year on year in the first four months of the year. 

In May, Multimedia Polska, Poland's third-largest cable TV operator, dropped its plans to raise PLN950mn in an IPO. The offer of a 49% stake would have been the country's largest IPO since utility Energa's PLN2.17bn offer in December 2013. 

Poland's private pension funds, once a strong source of demand for IPOs, have become less inclined to invest in local stocks after the authorities lifted the ceiling on them increasing their holdings abroad from 10% to 20%. The government also stripped the funds of their government bond holdings, a move aimed at curbing public debt. 

"The IPO market in Poland remains sluggish," Zbigniew Porczyk, of Warsaw-based brokerage Trigon Dom Maklerski told Bloomberg on February 19. "New issuers and owners are not so willing to sell shares. Global investors are on the sidelines as Poland is close to the Ukrainian conflict from their perspective."

However, the media tech sector is bucking the downturn trend on global markets. Czechowicz points to three areas of interest: adtech - noting France's Criteo; lead generation business models - for example Germany's Trivago; and peer-to-peer e-commerce - New York-based Etsy. 

"On multiples - subject to stage, growth potential, size of targeted market - CEE is still far cheaper than Western Europe, and Western Europe cheaper than the US," Czechowicz says. He declined to say whether an IPO prospectus for Wp.pl has already been filed to regulators. 

PE funds Innova Capital and MCI Management completed the acquisition of WP in February 2014 for PLN60mn. Since then, Wp.pl has acquired new web services and become the market leader amongst Polish portals, ahead of Onet.pl, a unit of Germany's Axel Springer. 

Krzysztof Krawczyk, managing partner at Innova, said an IPO would be considered if the stock markets are in good shape, and if WP.pl shows "suitable results". The plan had been to float the company in the middle of Innova's investment horizon in 2016-2017, according to local media. 

Puls Biznesu reported on March 4 that the owners hope for a valuation of at least PLN900mn for WP.pl. That would suggest an estimated IPO value of PLN300mn, the paper claims, citing market speculation. An alternative scenario for the portal is the sale of a stake to a strategic investor, the paper claims. Unnamed sources named Yahoo, Alibaba and Yandex as potential suitors. 

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