Page 32 - bne_Magazine_June_2017

32 I Cover story bne June 2017
term plans for enterprises that remain in state hands as they are likely to be rolled into a new sovereign wealth fund cur- rently being mulled in Bucharest. The lack of information about how the fund will be managed has led to concerns about its transparency.
Looking to the private sector
More private sector listings won’t be of a size to compensate for Hidroelectrica’s delayed IPO, but they will have other benefits in terms of further diversification.
“Romania is the second largest market
in the region, but it is not clear how
the growth of the economy has been reflected in the growth of the capital market,” says Reichmann. “For this to be reflected, we should see diversification of products, a transparent and articulat- ed privatisation programme, and thirdly, investment education.”
She points out that for domestic institutional investors such as pension funds, “diversification is the key word. Otherwise they will not find adequate products for the quite important pockets of money they are managing, and will instead invest into foreign products and support other economies.”
The expectations are that while a flood of private IPOs is not expected, the pipe- line is now open. “We saw a huge suc- cess story with Medlife ... after Medlife I think the ice has broken because we saw several Romanian entrepreneurs opened their minds and are thinking actively of listing their companies on the Romanian stock exchange,” said Lucian Anghel, president of the BVB’s board of gover- nors, in an interview with bne Intel- liNews on the sidelines of the EBRD’s annual meeting in May.
There is also optimism from advisers, with Ionut Sas, tax partner at PwC Romania, saying the two successful IPOs gave a boost to the exchange and made the market more attractive, both to pro- spective companies interested in listing, and investors.
“There are good signs that other com- panies will follow – but this will also
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depend on the success of these two IPOs in the medium run,” Sas says. “Given that both IPOs were single listed on the Bucharest Stock Exchange, the trust in the market seems to be at a good level and, in order to have other success sto- ries, the market should be more liquid, attractive from the fees perspective, as well as to further update and modernise the legal and tax legislation for such transactions.”
The new private sector companies likely to come to market are participants in the Made in Romania programme launched by the BVB with the aim of selecting the most promising candidates for a capital market debut and funding advisory services to explore their options.
Anghel declines to mention the names or even the sectors of potential IPO candidates but says they are spread across “various sectors with very good growth prospects, or where the market
ments of IPOs in Croatia, Serbia and Slovenia, arousing speculation this could be the start of a larger return of the IPO markets in the region.
“There are good signs that the stock exchange market in Romania is going to be more attractive and that is considered as a viable financing or investment/ disinvestment solution,” says Sas, who argues that just as Bucharest followed the path of the Warsaw Stock Exchanges, other exchanges from the region could follow Bucharest.
In Croatia, tourism company Arena Hospitality Group, formerly Arenatur- ist, opened bookbuilding for its IPO on the Zagreb stock exchange on May 15, and was due to complete its offering on May 26. The decision to list followed the takeover of a majority stake in Arena
by London-based PPHE Hotel Group in 2016. PPHE then merged all its hotels in the CEE region, including eight Park
“There is quite a lot of investor appetite out there”
is not dominated by one player, it’s very fragmented. In fact the first one that will have this chance to take money from
an IPO or to have access to the capital market probably will be the next leader because it could get capital to acquire, or to consolidate market share ...To be the leader or not to be the leader, that is the question.”
This was more or less the strategy employed by Medlife, which has pursued an aggressive consolidation strategy
in the private healthcare market both before and after its IPO. In the last few months alone it has bought up an 80% stake in medical centre operator Almina Trading, as well as taking over private outpatient services provider Anima.
Beyond Romania
Bucharest is by no means the only stock exchange to see a revival in IPOs in
the last couple of years. The Digi IPO
in Romania coincided with announce-
Plaza hotels and Art’otels in Germany and Hungary, under Arena, which now operates 27 hotels in the three countries with more than 10,000 rooms.
Upon the takeover, “If market conditions allowed, PPHE planned to seek to raise new equity to enable Arena to accelerate its investment plans and finance expan- sion outside of Croatia,” a spokesperson for Arena told bne IntelliNews. “The Croatian tourist industry has attracted investor interest and it is believed that there is demand to invest in Arena at this point in time.”
The IPO of up to €100mn worth of shares is set to be the biggest on the Zagreb bourse post-crisis, dwarfing that of the first company to come back to the market, shipping company Tanker- skaPlovidba in early 2015.
Meanwhile in Slovenia, the country’s largest lender Nova Ljubljanska Banka