Poland Increases Price Range in Warsaw Exchange IPO

(Bloomberg) -- Poland increased the upper end of the price range in the initial public offering of the Warsaw Stock Exchange, the first emerging European bourse operator to go public, according to sale terms obtained by Bloomberg News.

The government is selling shares in the country’s sole stock exchange to institutional investors at 36 zloty to 46 zloty each, a 7 percent increase in the upper limit from the maximum price for individual investors, according to the terms. The IPO is part of a plan to raise 25 billion zloty ($8.9 billion) this year to help finance the government’s budget gap.

“There must be big demand for the shares as the company is an attractive asset, and so they’re trying to sell it at a higher price,” said Marcin Materna, head of equity research at Bank Millennium SA. “This is probably unprecedented in Poland as I can’t remember the government raising an IPO price as the sale is still going on.”

Demand for shares is “above average,” Ludwik Sobolewski, the chief executive officer of the Warsaw bourse, said during a conference call with reporters, declining to give figures for the new price range.

The Polish exchange has a market capitalization of $190 billion, making it the third-largest in emerging Europe after markets in Russia and Turkey. It has expanded faster than any other exchange in the region, more than doubling the number of traded companies and almost tripling daily turnover in the past decade, according to its website.

Poland, which has sold stakes in the nation’s biggest insurance, energy, copper and phone companies this year, has had the highest number of IPOs annually in central Europe since at least 2004, Bloomberg data show. Fifty-eight IPOs have raised $4.36 billion in 2010, the largest coming from state-owned insurer PZU SA and energy utility Tauron Polska Energia SA.

PZU, Tauron

PZU shares have jumped 19 percent from their April sale price and Tauron has climbed 25 percent since the government sold a stake in June. The benchmark WIG20 Index fell 0.8 percent today, trimming this year’s gain to 9.7 percent.

Maciej Wewior, a spokesman for the Treasury Ministry, declined to comment on the price range when contacted by phone today. He reiterated earlier statements that “in theory” the price at which the government will sell shares to institutions may be higher than for individual investors.

The maximum price for retail investors, who can buy as much as 30 percent of 26.8 million shares being sold in the IPO, was set at 43 zloty a share and cannot be increased, according to the prospectus.

Bookbuilding

The government, which is selling 64 percent of the bourse, will continue bookbuilding, or taking share orders, from institutional investors until Oct. 28, and is due to announce the final price by Oct. 29. Bookbuilding was shortened by four hours, to end at 1 p.m. local time on Oct. 28, the bourse said on its website today.

Based on the maximum offer price for individuals, the Warsaw exchange would be valued at 17.9 times its 2010 net income, compared with a median ratio of 16.9 for 19 world exchanges, according to ING Groep NV estimates on Oct. 22.

Citigroup Inc., Goldman Sachs Group Inc., JPMorgan Chase & Co. and UBS AG are the global coordinators of the bourse’s offering. Ipopema Securities SA, KBC Groep NV, Societe Generale SA, PKO Bank Polski SA, Bank Ochrony Srodowiska SA, Alior Bank SA, Banc Espirito Santo SA, IDM SA and Wood & Co. are helping manage the sale.