Western stock exchanges vie for a share of the stock-listing business from Ukraine’s promising emerging market
s, prompting them to vie for a share of the stock-listing business from this promising emerging market.
While most medium and large-sized Ukrainian companies have set their sights on the New York Stock Exchange (NYSE) and London Stock Exchange (LSE) as platforms for their listings, the less expensive Warsaw Stock Exchange (WSE) has stepped up efforts to get a bigger piece of Ukrainian IPO action. The WSE is hoping to fill a niche for small-sized placements.
The WSE announced plans July 9 to open a representative office in Kyiv. The announcement came just four weeks after NYSE Euronext made a pitch to Ukrainian companies encouraging them to float shares on their trading platform in favor of the LSE, which is traditionally preferred by Ukrainian companies.
In the past two years, most Ukrainian companies have opted to place their shares through initial public offerings on the LSE’s Alternative Investment Market, a less regulated platform intended for medium-sized emerging market companies. More than a dozen companies have floated share interest through depository receipts that are traded on the Frankfurt Stock Exchange.
Analysts say that investment hunger for fast-growing emerging market companies is high, prompting competition between stock exchanges.
Dr. Lidia Adamska, a member of the WSE Management Board, told the Post that the “Warsaw Stock Exchange is active in reaching out to foreign prospective issuers and investors throughout Europe in general and the Central and Eastern European region in particular.”
“The Ukrainian market, given its significant size and growth potential, is of special interest,” she said.
The WSE office in Kyiv will help promote the Polish exchange to Ukrainian companies as an option to the NYSE and LSE trading platforms.
“The office…will serve as an easily recognizable point of first contact in Kyiv,” Dr. Adamska added.
The office will open once a second Ukrainian company lists its stock on the WSE, which could happen this year. Astarta was the first Ukrainian company to list its shares on the WSE. The sugar refinery business attracted $30 million, placing a 20 percent stake.
WSE officials expect Kyiv-based real estate developer and investment company XXI Century Investments to float shares on the WSE by year-end. XXI Century raised around $140 million on the LSE’s Alternative Investment Market in 2005 by floating a minority stake.
Another Ukrainian company, whose name was not disclosed, but which operates in the food industry, could list on the WSE this year, sources said.
Ukraine will be the only country outside Poland where a WSE foreign office would be located. Neither the LSE nor NYSE Euronext have offices in Ukraine.
Dr. Adamska said, “Ukraine is an important direction for our development and cooperation activities. Also, most other markets that we are interested in are within the EU and we have a different business model there.”
Konstantin Fisun, a managing partner and head of the analytical department at Kyiv-based investment brokerage Concorde Capital, said that the opening of the WSE office “shows that they will compete for issuers.”
Fisun said most medium and large-sized Ukrainian companies will stick to plans to float shares on markets further west, where more investors are located. But small companies that could successfully place their shares in Kyiv will also consider a listing on the Warsaw market to increase exposure, Fisun added.
With a market capitalization of about $70 billion, the fast-growing Ukrainian equity market is catching up with Eastern European peers, such as the Czech Republic and Poland. Hydrocarbon-rich Russia leads the way, with a market value of nearly $1 trillion.
Currently there are a total of 314 companies listed on the WSE trading floor.
WSE-listed foreign and domestic companies’ equity market capitalization stood at $322 billion as of July 23, with foreign companies’ share capitalization accounting for $108 billion of this total.
Companies raised $5.6 billion through listings on the WSE in the first half of this year. The WSE is a joint stock company founded by Poland’s State Treasury.
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