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bne November 2017 Companies & Markets I 11
Finance Romania S.A. as co-lead manager in connection with the offering. Rothschild is acting as financial adviser to the company.
Sphera is a leading food service group in Romania, operating a portfolio of international brands: the KFC, Pizza Hut, Pizza Hut Delivery and Taco Bell franchises, as well as the KFC franchise in Moldova and in two regions in Northern Italy.
On the Romanian market, KFC ranks second in the quick service restaurants (QSR) segment, Pizza Hut Dine-In is the market leader in the full-service restaurants (FSR) segment and Pizza Hut Delivery ranks second in the delivery segment in terms of sales.
The group’s franchised foodservice business was launched in 1994, with the opening of the first Pizza Hut restaurant, which was followed by the opening in 1997 of the first KFC restaurant, both in Bucharest.
“The Romanian foodservice sector is expected to grow at an average annual growth rate of 4.6% between 2017 and 2022”
The company’s net profit increased 9.2% on the year to RON51.6mn last year. Since 2012, the group has expanded its restaurant network by 40 units, or by 63%, to a total of 104 as of September 30, comprising 67 KFC restaurants (63 restaurants located in Romania, two restaurants located in Moldova and two restaurants in Italy) and 37 Pizza Hut units (of which 16 are delivery units).
“We are encouraged by the market environment and anticipate that the positive macroeconomic and industry trends will continue in and beyond 2017,” Mark Hilton, Sphera CEO, said.
The Romanian foodservice sector is expected to grow at an average annual growth rate of 4.6% between 2017 and 2022 given the current under-penetration of foodservice units per capita and also due to the expected growth in disposable incomes.
Despite the recent series of IPOs, FTSE Russell retained Romania on its watch list as a frontier market, with the country to be reviewed for possible reclassification as a secondary emerging market in September 2018.
The main sticking point for Romania in its quest to achieve emerging market status was the low level of liquidity on the market. It is not expected to boost liquidity sufficiently for an upgrade until the IPO of state controlled hydropower company Hidroelectrica, for which the timing is unclear.
EM fund managers push Czech koruna to strongest levels in four years
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The Czech koruna hit its strongest levels against major currencies in around four years across October 4-5 as top-performing emerging market fund managers stuck to an underlying bearishness on the dollar and bought into more exotic currencies.
The koruna is a star player among the world's currencies this year amid exceptional Czech economic growth and was trading at 25.81/euro and 22.04/dollar by the end of trading on October 5.
Reuters reported that data from research firm eVestment showed that from the second quarter of 2016 to the second quarter of 2017, long positions in the Czech Republic’s local currency bonds surged to 44.9% from 11.4% and the proportion of investors with currency exposure to the koruna soared to 68.0% from 12.7%.
On October 5, analyst Frantisek Taborsky of Raiffeisenbank told Czech daily Pravo that it was clear before the September 27 Czech central bank meeting that opted to hold rates - though the regulator is widely thought very likely to make another cut at its November meeting - that speculators were intent on betting on
a further appreciation of the currency. That was despite existing exposure amounting to tens of billions of euros. Taborsky anticipated that the koruna would strengthen to 25.70/euro by the end of this year.
In early September Dutch bank ING, which a year ago predicted that buying the koruna would be “the trade of 2017’”, said it was closing its recommendation on the currency. It had risen less than expected since the ending of an exchange rate cap and speculation on the currency was overbought, the bank said.
ING had recommended clients position for a jump in the koruna’s value against the euro as the Czech central bank prepared to scrap the 27/euro cap introduced in late 2013. Since the central bank went ahead and removed the cap in April, the koruna has struggled to break below 26.00/ euro, despite the central bank starting out on a monetary tightening cycle. ING had predicted it might strengthen against the euro by more than 10% but to date since the cap was pulled it has not even attained half that.
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