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| Use of Central and Eastern European Stock Exchanges as a Private Equity Exit Alternative |
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by David Dixon (Chadbourne & Parke) and Heinrich Pecina (Vienna Capital Partners)
David Dixon (ddixon@chadbourne.com) is a Partner in Chadbourne & Parke’s Warsaw office, and Heinrich Pecina (pecina.h@vcpag.com), is a founding Partner of Vienna Capital Partners. This article appeared earlier in Financier Worldwide.
During the economic downturn of the early years of the new millennium many commentators were predicting the demise of Central and Eastern European (CEE) stock exchanges. Private equity investors in CEE were lamenting the incipient loss of a potential exit route for CEE investments. Fortunately, CEE exchanges have rebounded from their moribund state to become a legitimate exit vehicle for private equity investors in CEE.
Development and Legal Convergence of CEE Equity Markets
The indices of the three most important CEE exchanges, the Warsaw Stock Exchange (WSE), the Budapest Stock Exchange (BSE) and the Prague Stock Exchange (PSE) significantly outperformed world indices in 2004. For example, compared to 2003 by the end of October 2004, the BSE’s BUX had gained 38 percent, the WSE’s WIG 20 was up 13 percent and the PSE’s PX 50 had gained 37 percent. The gains for all of 2004 ultimately were 57 percent (BUX), 25 percent (WIG 20) and 56 percent (PX 50). The largest exchange, the WSE, was home to 32 IPOs in 2004 and 2005 is predicted to be strong there as well.
Reasons for resurgence of these key CEE exchanges include the high growth attributed to European Union accession countries, favorable valuation multiples being realized in these CEE markets and the large cash inflows into equities and bonds in these CEE countries. Recent successful, sizable transactions in Poland, Hungary and Czech Republic, such as those by BorsodChem Rt. (Hungarian chemical company, €388m secondary offering and dual listing on the WSE), Cesky Telecom (Czech telephone company, €684m ABB), Telekomunikacja Polska S.A. (Polish telephone company, €350m ABB), MOL (Hungarian oil company, €275m ABB and dual listing on the WSE), Zentiva (Czech drug maker, €174m IPO) and PKO (Polish bank, €283m IPO) have given needed credibility to equity offerings in the region.
Artikel lesen (PDF, 97KB)
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Source: EuroWatch Oct 31, 2005. This article appeared earlier in Financier Worldwide. |
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© VCP AG 2010
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