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Energa fails to spark investor interest

16th December 2013
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The share price of Poland's third-biggest utility dropped by over 5 percent on its first day of trade

After some promising IPOs this year, investors were hoping that Energa’s flotation would bring some quick profits as well. In the last few months there have been several companies whose stock gained around 20 percent during their first day of trade: Peixin, 26.9 percent; MLP Group, 23.2 percent; PKP Cargo, 19.3 percent. Comparatively, Energa’s IPO, the biggest on the Warsaw Stock Exchange this year, was a let-down. 

Energa CEO Mirosław Bieliński (left) and Treasury Minister Włodzimierz Karpiński (right) put on a brave face at the utility's stock debut
Courtesy of Energa

During its first day on the WSE, Energa’s share price dropped by 5.4 percent, leaving thousands of investors disappointed. Analysts were expecting these drops, however, as the current investment climate is not favorable.

After the Polish parliament approved changes to the Polish pension systems, which forces privately-run pension funds to move 51.5 percent of their assets to the state-run social security system ZUS, the WSE has been on a losing streak, as the bulk of pension assets are on the stock exchange and investors are worried that without them, the bourse will have a hard time.

The trade volume of Energa shares was zł.576 million during its debut outing on the WSE, while trade on the entire blue-chip WIG20 index was zł.568 million that day. The figures mean Energa employees were selling the stock they owned. Since their shares were not restricted by any lock-up period, they decided to cash in on profits as quickly as possible. The lack of interest shown by institutional investors did not help matters.

Energa CEO Mirosław Bieliński said that the company stock is tailored for long-term investors, not short-term ones, as the company has already announced that it will pay zł.400 million in dividends from this year’s profits and zł.500 million from next year’s.

Energa’s IPO was worth zł.2.4 billion, making it the largest on the Warsaw bourse in two years and the biggest in the CEE region this year. The State Treasury sold a 34.18 percent stake in the company in the offering.

Jacek Ciesnowski

From Warsaw Business Journal

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