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Condition of Capital Markets in Poland


2015 for Polish capital markets reflected reduced interest among investors and a decrease in the amount of concluded transactions.

One of the factors that influenced this slowdown in activity was the reform of open-end pension funds (OFE), which resulted in a reduction of capital that they could allocate to investments in shares listed on the Warsaw Stock Exchange (WSE). The OFE reform, particularly in view of parliamentary elections and the change of government in Poland, raised serious doubts as to the future condition of the stock market and the institutional framework of trading in financial instruments.

Over the passing year, the capital market was not the subject of significant legislative changes. However, recently, the Polish financial regulatory authority – the Polish Financial Supervision Authority (KNF) – announced its position on the amendments to the prospectus approval procedure which entered into force in September. For issuers it mostly means increased cooperation with the KNF in setting a timeframe for approval proceedings. According to the KNF’s position, prospectus approval proceedings shall be shorter and last not more than six to eight weeks in the case of properly prepared documentation. In addition, in order to gain investors’ trust, the KNF makes information on the course of ongoing administrative proceedings regarding the approval of the prospectuses public (the information is published on the KNF website).

The Polish capital market did not surprise its participants with significant developments. Market activity mostly revolved around companies’ transfers from NewConnect – an alternative trading system to the main market of the WSE. Nonetheless, several notable transactions, both mid and high value, were conducted during the last few months. One of the biggest transactions conducted recently (with a value of approximately PLN 121 million) which ended with a huge success, was the IPO of InPost S.A. – an independent Polish postal operator. It is worth mentioning that the major investor in the InPost IPO was the European Bank for Reconstruction and Development, which acquired 20 per cent of offered shares. Other successful debuts on the WSE included Wittchen S.A. – a Polish manufacturer of luxury leather products (with a value of approximately PLN 55 million) and Poznanska Korporacja Budowlana PEKABEX S.A. – a leading manufacturer of prefabricated structures in Poland (with a value of approximately PLN 74 million). Transactions such as these demonstrate that there is still a place for financially stable companies on the market.

Even if 2015 was not the best year for capital markets in the classical sense, there was a noticeable increase in the activity of private equity funds on those markets, particularly in debuts and sales of shares of selected PE funds’ portfolio companies, as well as with regard to refreshing portfolios and planning new investments. A perfect example is the purchase of the state-owned company PKP Energetyka S.A. – the energy unit of Polish National Railways (Polskie Koleje Panstwowe S.A.) by the CVC Capital Partners private equity fund, which – at approximately EUR 477 million – was one of the largest private equity transactions in Poland (CMS was legal counsel to CVC Capital Partners in the transaction). Compared to other PE funds’ investments on the Polish market, only the purchase of Emitel – the leading terrestrial radio and TV broadcast infrastructure operator in Poland – by Alinda Capital Partners in 2014 was of a similar scale.  

Another transaction that is worth mentioning was the July 2015 sale of Home.pl – one of the largest providers of Internet services in Central and Eastern Europe – to the Value4Capital private equity fund for approximately EUR 150 million. Considering the scale of interest in the target company, the competition in the sale process, the return on investment to the PE fund, and the price, this was another of the most prominent deals in Poland this year.

In conclusion, 2015 was characterized by a lower number of major transactions on the WSE and thus medium activity in the capital markets area. Nevertheless, recent IPOs are a good basis for sustaining the upward trend in 2016, and they indicate that the Warsaw Stock Exchange will remain one of the most prominent trading floors among European exchanges. 

By Michal Pawlowski, Partner, and Rafal Wozniak, Of Counsel, CMS

This Article was originally published in Issue 2.6. of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

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