WARSAW As a Financial Centre www.ft.com/warsaw-finance-2012 | twitter.com/ftreports Inside this issue Real estate Buoyant growth gives city clout Lack of office space spurs foreign Jan Cienski notes that one of the biggest and oldest groups to private equity firms in the crowd in Poland has been more region. “One needs to approach Page 2 successful than most other countries in the region more selectively. It’s the most The stock exchange regional rivals in liquid hub. If you want to do an Bourse promises a sharper developing a sector IPO in the region, you have to eye on small listings look at Warsaw.” Page 2 with a wider reach However, deal size is much smaller than in western Europe, Banks Conservatism has resulted in relative strength n international finan- a reflection that the companies Page 2 cial centre is seen as that have grown up in the the hallmark of a seri- region in the two decades since Privatisation State takes ous country – which is the end of communism have not strategic approach Awhy emerging economies from yet reached the scale of their to sell-offs Page 3 South Africa and Brazil to Rus- rivals from wealthier countries. sia, Turkey and Poland are all That keeps big international M&A The lack of credit is trying to build up their financial and pan-European groups on the likely to prompt a wave muscle. sidelines, dipping into Poland of consolidation Page 3 Poland has been more success- when the rare huge deal comes ful than many central European up, but otherwise leaving the After hours Frogs’ legs rivals in creating a sector that sector to local firms. and football has wider than national signifi- Last year, more than half of (left) are cance. In fact, Warsaw has left private equity spending in the on the other central and eastern Euro- region was on Polish assets and, menu. pean (CEE) capitals such as when firms turn to investors to Increasing Budapest and Prague far behind raise funds, it is the country’s wealth has and, by some metrics, has economic strength that makes transformed the bleak grey city that passed Vienna. their pitches attractive. emerged from the soviet A significant factor in While private equity capital era Page 3 Poland’s growing financial clout roams the region looking for is its above-average growth. deals, the rest of the financial Fiscal policy The As the finance ministry never sector based in Warsaw is more government aims to extract tires of pointing out, Poland has limited in its reach. more tax alongside gas shown the most resilience of About two-thirds of the coun- Page 3 any EU country in the crisis. try’s banks are owned by for- Between 2008 and 2011 the eign groups, and their Polish Private equity Firms hope economy grew by 15.7 per cent, subsidiaries focus exclusively founders are willing to while the average for the EU on the Polish market – which stand down – at the was a 0.5 per cent contraction. means headquarters and the moment, the market tends The European Commission esti- bulk of pan-European analysts to be dominated by a few mates the economy will grow by Warsaw has become a regional hub for private equity Dreamstime and decision makers are based large transactions Page 4 2.7 per cent this year. in cities such as Milan, Frank- Poland’s biggest international tries, where the German-style exchanges, along with Moscow, ists educated in Polish universi- salaries than financial profes- furt and Vienna, not Warsaw. Business education financial success is the Warsaw system of bank-led capitalism Istanbul or Oslo.” ties – has grown up around the sionals in Lisbon or Madrid. The largest local bank, the Employers Stock Exchange, which now prevails. Its eagerness to attract list- WSE. Rodrigo Carvalho, the Warsaw has also become a state-controlled PKO BP, hoped are sceptical accounts for more than half of The Warsaw bourse is also a ings – it regularly leads the Poland director for Portugal’s regional hub for private equity. to become a regional business about the central Europe’s share trading conduit for Poland’s interna- European rankings for initial Espirito Santo Investment Bank, The largest CEE funds tend to but expansion plans fizzled. value of an volume. tional financial ambitions, as public offerings – have caused says: “You have all the global have their headquarters in the Polish banks are more solid MBA. Some The exchange plays a big part increasing numbers of regional some problems, and the authori- players and a decent number of Polish capital, although they do than many in the eurozone. Tier schools link in the country’s financial sys- businesses choose to list there. ties are promising to focus more regional [ones], such as ING, also have representative offices one capital, a metric of a bank’s with foreign tem, and the option to go into The exchange even has an index on liquidity and quality. Deutsche Bank and Erste Group in cities such as Prague, Buda- financial strength, is 12 per institutions the market to obtain capital of Ukrainian companies. An ecosystem of traders, ana- on the scene in Warsaw.” pest and Bucharest. cent, well above international to underpin quality and enters into the calculations of Ludwik Sobolewski, the chief lysts, accounting and law firms He adds that his office has “Poland is very attractive,” requirements, and borrowers credibility Page 4 companies to a much larger executive, says: “I would like us and investment banks – who are only two non-Poles and 53 says Robert Manz, a managing degree than in other CEE coun- to be seen as one of the big increasingly hiring local special- locals, who tend to earn higher partner of Enterprise Investors, Continued on Page 2 2 ★ FINANCIAL TIMES WEDNESDAY MAY 23 2012 Warsaw as a Financial Centre Bourse promises a sharper eye on small listings Buoyant growth fourth largest IPO in Europe. Avtech Aviation & Engineering, plans for secondary offerings of tem last year saw some starting to issue debt, some- The stock exchange But as the numbers show, one a British company that saw its shares in large state-controlled resources diverted from priva- thing the financial services reg- large deal, such as JSW, can shares fall by 44 per cent on companies, such as PKO BP, the tised pension funds back into ulator favours, as it reduces reli- gives A rush of inadequately account for more than half of New Connect after its IPO last country’s largest bank, whose the state system – as a way of ance on short-term deposits. prepared companies IPO liquidity. summer. Trading in its shares secondary offering worth about reducing public debt. It was Andrzej Jakubiak, head of the There are numerous smaller was later halted, after it was 10bn zlotys (€2.3bn) was can- thought this would create prob- Polish Financial Supervision could tarnish a businesses, especially on the revealed the company had not celled last year because of mar- lems because the pension funds Authority, says: “If we can get city clout reputation for care and alternative New Connect mar- given information about its debt ket volatility. are largely limited, by law, to 20 per cent of assets to be long- ket. This pulled in 172 listings in in listing documents. Henning Esskuchen, co-head Polish investments and have er-term in 5 years, that would Continued from Page 1 a methodical approach. 2011, more than half the EU Mr Sobolewski wants to of CEE equity research at Aus- been a leading contributor to improve managing liquidity,” Jan Cienski reports total. However, those listings ensure that a rush of inade- turnover on the WSE. Trading on Catalyst, which are doing a better job of repay- had a value of only €133m. quately prepared companies to However, raising the percent- amounted to 579m zlotys in the ing their debts than most of Ludwik Sobolewski, WSE’s the market does not tarnish the ‘Foreign investors age of their assets that the first quarter, is still fairly thin, their peers elsewhere in the Too much growth can some- chief executive, who spends WSE’s reputation. account for about funds could invest on the but is growing. Turnover in the region. times be a bad thing – as the much of his time touring the Thanks to careful regulation exchange, has meant the market first quarter of 2010 was only But banks are increasingly Warsaw Stock Exchange, with region trying to drum up list- and a methodical approach to 50 per cent of the did not suffer a shock. 179m zlotys. reluctant to lend, a policy par- its big appetite for attracting ings from Russia, Ukraine, the building capital markets, the market but they are As it has developed, the WSE This year will also see one of tially driven by decisions taken listings to its main and alterna- Baltic countries, the Balkans bourse plays a much larger role has moved away from reliance the biggest changes in the func- in non-Polish headquarters, as tive markets, is finding out. and Israel, admits that the in the national economy than do only interested in the on equities, creating a mercan- tioning of the exchange, as it foreign institutions build up The WSE has long been one of exchange needs to slow down stock exchanges in most of the tile exchange, a bond market abandons its old trading system their capital. the EU’s top exchanges for new this kind of activity, especially rest of central and eastern most liquid stocks’ called Catalyst and buying an and in November adopts a plat- Bankers’ caution has an listings.