Poland is set for the largest initial public offering (IPO) in its history, and one of the largest debuts in Europe this year, as the country’s leading e-commerce group, Allegro, announces plans to list on the Warsaw Stock Exchange.
After months of speculation, on Monday Allegro confirmed in intention-to-float documents that it is preparing for an IPO, which will most likely take place next month. The company plans to raise about 1 billion zloty from new shares, as it cashes in on the online retail sales boost during the coronavirus pandemic and pays off debt.
It will also allow for those who currently hold stakes in the company – private equity firms and company managers – to sell their existing shares. This secondary offering is likely to exceed the value of the new shares. The firm’s owners are seeking to bring in over €2 billion (8.9 billion zloty), reported Bloomberg in June.
Founded in 1999 and headquartered in Poznań, the group runs Poland’s largest e-commerce platform, Allegro.pl, as well as leading price comparison site Ceneo.pl. Since 2016, it has been owned by three international investment funds, who bought it from South African multinational Naspers in 2008.
“We have over 12 million regular customers, over 100,000 small and medium businesses on our platform and we are such a trusted brand in Poland that Warsaw is the natural place to be for us,” said Allegro’s boss, Francois Nuyts, on Monday.
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“[Allegro] could become the largest company to be listed on our exchange,” Marek Dietl, CEO of the Warsaw Stock Exchange, told Notes from Poland.
That title currently belongs to Polish gaming company, CD Projekt, maker of The Witcher franchise, which earlier this year surpassed Poland’s biggest bank, PKO BP, to become the country’s most valuable listed firm.
CD Projekt is currently valued at over 40 billion zloty (€9 billion), while Allegro is aiming for a valuation of between 44.5 and 53.4 billion zloty, reports the Financial Times.
“Allegro’s debut will be the largest IPO in the history of the Warsaw Stock Exchange and may also end up being one of the largest debuts in Europe this year,” says Dietl. To date the largest flotation in Poland has been that of state-owned insurance giant PZU, which raised €2.1 billion in 2010.
Since then, the exchange, which is dominated by state-controlled firms, has attracted few new listings. Poland’s market for initial offerings has raised just $100 million over the last three years, calculates Bloomberg.
The Allegro listing, however, could open the floodgates. There are early reports that two other firms from Poland’s thriving video games industry – which have also done well during lockdown – are eyeing potential entrances.
Both Huuuge Inc., a mobile casino app operator, and People Can Fly Group, a computer game developer, have filed with regulators about selling shares.
“After Poland was added to the group of developed markets by FTSE [Russell], the Warsaw Stock Exchange has attracted growing attention of global investors,” says Dietl. “By launching on the Warsaw Stock Exchange, Allegro will have the chance to benefit from that attention.”
In September 2018, FTSE Russell, a leading global index provider, promoted Poland’s status in its classification from “Emerging Market” to “Developed Market”, joining the ranks of the world’s 25 most advanced economies and signalling to investors that it harboured large and well-regulated financial markets.
Poland was the first country in almost a decade to be promoted to Developed Market status, as well as the first in Central and Eastern Europe.
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— Notes from Poland 🇵🇱 (@notesfrompoland) April 17, 2019
The share of online sales in Poland’s retail market is still relatively low compared to other large economies. In 2019, the online retail market share stood at 8.4%, compared with 18% in the UK, reports Bloomberg.
This, however, is seen as proof of scope for further growth, especially given Poland’s expanding middle class and already advanced digital payments market.
As elsewhere, Polish online retailers have seen a boost during coronavirus lockdown. Allegro’s sales rose by 52%, reaching 1.77 billion zloty in the first half of the year. The company said it is looking to raise capital to repay part of its debt, and hopes to use the IPO to raise its public profile, reports Bloomberg.
Main image credit: Allegro/Twitter