Poland plans central Europe’s biggest IPO in two years

The Polish government is gearing up for central Europe’s biggest IPO in two years as it prepares to sell a stake in electricity company Energa.

The Polish State Treasury has started the process of selling 141.5 mn shares – or a 34.2 percent stake – in the country’s third-biggest utility company, raising up to 2.83 bn zł ($913 mn). Shares have been set at a maximum price of 20 zł each, according to a prospectus published on Energa’s website, with Bloomberg News reporting that the state, whose stake will fall to 50 percent, plans to sell its shares for at least 15 zł each.

‘There should be demand for the stock as Energa is set to join all main indexes key to foreign investors due to its free float,’ Jaroslaw Niedzielewski, investment director at Warsaw-based Investors TFI, told Bloomberg News. ‘The final price may be near 16 zł-17 zł.’

The upcoming IPO is part of Poland’s 2013 asset sale target of 5 bn zł, of which around 1.91 bn zł has been raised so far. Over the past five years the country has sold stakes in a number of Energa rivals including PGE, Tauron Polska Energia, Enea and PAK, with a total of 12.9 bn zł raised, according to data compiled by Bloomberg.

Energa, which makes most of its profit from a regulated power-distribution business, delivering electricity to 2.9 mn homes and businesses, revealed last month that nine-month EBITDA had been boosted by 13 percent to 1.5 bn zł. Net income also rose 15 percent from the previous year to 610.8 mn zł.

According to the Energa prospectus, the firm will stop collecting bids for shares from institutional investors on December 3, ahead of a trading launch on the Warsaw Stock Exchange on December 11. It also reveals plans to recommend a dividend of up to 400 mn zł for this year, rising to 500 mn zł for 2014, with payouts increasing by at least the rate of inflation from 2015 onward.

This is not the first time the Polish Treasury has tried to sell Energa. A planned 7.5 bn zł sale for an 84.2 percent stake to rival PGE – the country’s largest utility firm – was blocked by Poland’s antitrust regulator in 2010, though Bloomberg reports that PGE remains interested in Energa and may buy shares in the IPO.