Page 34 - bne_Magazine_June_2017

34 I Cover story bne June 2017
“We have received indications from investment bankers operating in Bul- garia that they are working on certain projects and we will most likely see
the results in late 2017 and early 2018. Moreover, a few IPOs of large energy and industrial companies were post- poned because of regulatory obstacles but once these are cleared I’m quite sure we will see these IPOs – probably next year,” says Takev.
“What we lack at the moment is size, and large listings on the exchange would compensate for this and allow us to gain critical mass and increase our visibility.”
Stoyanov adds that political instability in Bulgaria, where a series of snap elections have taken place following successive government collapses, has been another factor deterring new listings. However, now that a new government is in place, companies previously considering IPOs may finally go ahead with their plans.
“Now that the government has been selected we expect that the IPOs
“We’d like to say the recent IPOs are the start of a trend but we want to see a bit of a pipeline before we can comfortably say we're back on the move again,” says Jim Turnbull, head of capital markets at the EBRD. “Most people would call this the next wave, and Romania leads in terms of good growth numbers, but we can’t underestimate the amount of issues.”
Manfred Exenberger, director of equity capital markets at Raiffeisen Bank Inter- national, is also cautious about calling this a major return except in the biggest markets of the CEE region – Poland and Romania.
“We see more activity in Romania, and there are other transactions in the pipe- line. There is quite a lot of investor appe- tite out there. The investor base we are talking to like to see new names coming from Eastern Europe, including South- east Europe,” he tells bne IntelliNews.
“Romania and Poland are the most active markets. It’s going to be more dif- ficult for less developed markets without a certain deal flow,” says Exenberger.
of the countries are quite small so we need some sort of linkage strategy and coordination of capital market infra- structure. That’s why we have been supporting reforms that treat the region as a region,” he says.
The EBRD supported the SEELink proj- ect to connect exchanges in the region, initially by creating a common trading platform. Launched by the exchanges from Bulgaria, Croatia and Macedonia, it has since been joined by the Belgrade and Ljubljana bourses.
Other dealmakers warn that changing sentiment in the wider global investor environment could quickly close down the opportunity for regional companies to list.
Whether more companies from the region will list in the coming months or years “will depend for the most part on the general state of the global capital market, which has been fuelled by the general global oversupply in capital,” says Edward Keller, a partner at Dentons and head of the capital markets practice at the law firm’s Budapest office. “If
the markets generally continue to be as robust as they have been in the last year, then of course we will see more IPOs from Slovenia and Romania in particu- lar, and to a lesser extent from Croatia.”
Günther Artner, head of equity and corporate capital markets at Erste, also sees the revival of the IPO market in SEE as part of a wider trend across Europe. “We believe this revival trend of the IPO market is not a trend unique for SEE,”
he says, attributing it to a combination of the “massive amount of liquidity avail- able on the financial markets”, which is making transactions relatively easy to implement at present, together with the strong economic situation in Central and Southeast Europe.
But he remains optimistic that the good times will keep rolling. “Investors have risk appetite and therefore we may see further deals in the region. We see a similar development in Western Europe or other CEE countries ...We don’t see an end of this trend anytime soon,”
he says.
“It’s going to be more difficult for less developed markets without a certain deal flow”
planned before these elections would switch gear and soon be announced,” Stoyanov forecasts. “The most impor- tant sign for the potential comeback is that apart from investors’ interest there are more and more companies look- ing in that direction for funding their activities. Since demand and supply are already in place it would be a matter of timing before the next interesting IPO in Bulgaria takes place.”
The bigger picture
The question now is whether the recent spate of IPOs are isolated incidents or part of a bigger return to the capital markets of Southeast Europe. Some dealmakers interviewed by bne Intel- liNews remain cautious.
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“Once you have a track record and flow of transactions, this creates a positive feedback loop and more transactions. You also need a minimum size of the market and economy, which is certainly the case for Poland and Romania.”
Another important factor is stability, points out Elana’s Stoyanov. He believes that with all the IPOs announced across Southeast Europe “we are definitely witnessing some form of a comeback” but that political and economic stability is needed if this trend is to continue.
To really boost the number of IPOs
– and consequently the liquidity of exchanges in the region – Turnbull says a regional strategy is needed. “Many