Warsaw Exchange Sees Record Listings in 2008, Led by Small-Caps

By Pawel Kozlowski

July 28 (Bloomberg) -- The Warsaw Stock Exchange expects a record number of companies to start trading this year because smaller enterprises are increasing share sales even as the benchmark index falls for the first time in six years.

About 50 companies may debut on Warsaw's main market in 2008 and the number of stocks on its one-year-old NewConnect for firms valued at less than 20 million zloty ($9.8 million) may climb to 100 from 24 last year, Chief Executive Officer Ludwik Sobolewski said in a July 25 interview. A total of 57 companies listed in the first half of this year, compared with 105 in 2007.

Sobolewski's outlook counters a global decline after 380 companies held initial public offerings this year, compared with 854 in the same period in 2007, according to data compiled by Bloomberg News. Poland's WIG20 Index fell 24 percent in 2008, compared with an 18 percent drop in the MSCI Emerging Markets Index.

``The pipeline is full,'' Sobolewski, 42, who became CEO two years ago, said in Lodz. ``The question is what the situation will be on world markets.''

More than $11 trillion has been erased from global equity markets this year on concern credit-related losses topping $460 billion worldwide and the economic slowdown will cut profits, Bloomberg data show.

The decline in the WIG20 left its 20 companies trading at an average of 9.6 times reported earnings, compared with 12.7 for MSCI's index of developing countries and 11.1 for the Dow Jones Stoxx 600 Index, a measure for western Europe.

The WIG20 almost tripled from 2003 through 2007.

Slowing Growth

Poland's growth in gross domestic product may slow to 5.5 percent in 2008, from 6.6 percent last year, the government said in May. That's almost triple the 1.8 percent growth forecast in 2008 for countries that share the euro, based on European Central Bank figures.

The state-owned exchange attracted 23 companies to its main market in the first half and 34 on NewConnect, which started in August last year.

Poland had the most initial public offerings in Europe after the U.K. in the first six months, the bourse said, citing a report by PricewaterhouseCoopers LLP.

The Warsaw exchange is the 17th biggest in Europe with a market value of $187 billion, according to Bloomberg data. There are currently 366 companies traded on its main market, including 25 foreign enterprises, according to the exchange's Web site. Another 61 trade on NewConnect, Sobolewski said.

Public Offerings

The government said it may sell minority stakes to the public this year in Polska Grupa Energetyczna SA and Enea SA, worth at least 3 billion zloty ($1.5 billion) each.

Companies from the Czech Republic's alternative energy industry may be among the first foreign listings on NewConnect, Sobolewski said. He declined to specify the companies.

NewConnect companies don't need to file a prospectus before selling shares and have to report financial results once a year, not every quarter, as is the case on the main Polish market.

The Warsaw bourse bought a stake in Romania's futures exchange in 2007 and expressed interest in taking over the Sofia Stock Exchange if the Bulgarian government sells its stake. The Polish bourse acquired 25 percent of Ukraine's Innex stock exchange earlier this month.

``Ukraine is the most important market for our expansion in the region,'' Sobolewski said. ``We treat this investment in the Innex market as an important beachhead for our expansion.''

Stake Sale

The Polish government, which owns 98.8 percent of the exchange, wants to sell a 19 percent stake in the bourse in an IPO. A further 28.8 percent of the exchange will be sold to institutional investors who won't be allowed to sell the shares without the state's consent, according to government plans announced in March.

The IPO still has a ``chance'' this year if lawmakers pass legislation by October paving the way for the sale, Sobolewski said. The main change in the legislation for the exchange is allowing it to pay a dividend, he said.

``Without doubt there's political will in this government to carry out this IPO,'' Sobolewski said. ``The sale terms that were announced earlier this year might be changed but the government keeps its plan to sell a minority stake at this stage.''

To contact the reporter on this story: Pawel Kozlowski in Warsaw pkozlowski@bloomberg.net