[LINK] "Prague Exchange Lags Warsaw After Missing ‘IPO Train’"

[rfmcdonald]

The interesting stories of late suggesting that Poland is quickly something of an economic power--its economy actually grew during last year's Europe-wide recession-- in central and eastern Europe, if not Europe-wide. It may have been a mistake not to include Poland in the G20.

When Czech solar plant builder Photon Energy AS decided to raise money two years ago in a stock sale, it bypassed Prague and went to the Warsaw exchange.

Photon isn’t alone. Poland hosted 1.59 billion euros ($2.2 billion) of initial public offerings last year, placing it third in Europe behind NYSE Euronext and London, according to PricewaterhouseCoopers LLP. It has added 117 companies since the beginning of 2009. Prague hasn’t had an IPO since 2008 as trading volume dropped 53 percent during the past two years.

“The Prague Stock Exchange is to me an internet cafe where the same people always trade the same 10 to 15 papers,” said Georg Hotar, Photon’s co-owner and chief financial officer, in an interview last month in Prague. “The market doesn’t fulfill one of its primary functions, to be a place where companies can raise capital. In Poland, they can.”

The Warsaw Stock Exchange, where listings on the main market rose to 385 from 225 in the past decade, will become emerging Europe’s first publicly traded bourse next month after the state sells a 64 percent stake. In the same period, the number of companies traded in Prague dropped to 26 from 151 as the lack of institutional investors makes it difficult for companies to raise money.

[. . .]

The new listings have helped triple the value of Polish- traded shares to $189 billion since February 2009. The market is now bigger than Austria’s at $122 billion and the Philippines’s at $129 billion. Prague market capitalization is $47 billion.

Prague fell behind Warsaw as the Czech government chose to sell state-run companies such as carmaker Skoda Auto AS directly to foreign owners while companies such as lender Ceska Sporitelna AS were delisted. Companies also prefer to get bank loans than tap the stock market for funds because they would have to disclose financial information, said analyst Silvio Kotarac at KBC Groep NV’s Patria Finance brokerage in Prague.

Poland’s market has been helped by IPOs of state assets and by laws that force pension funds to invest 95 percent of assets inside the country. Taxpayers are legally obliged to put a portion of their social-security taxes into one of 14 private funds, which jointly managed 201 billion zloty ($71 billion) in August. Stocks represented 33 percent of their holdings, data on the financial regulator’s website show.