It is getting more difficult for Ukrainian companies to hold IPOs of Warsaw Stock Exchange. Various experts suggest different reasons for such situation, yet the main two are high volatility within the financial markets at the moment, which is correlated with the global instability (U.S. government debt, crisis within certain EU countries); and high saturation of WSE with financial assets of Ukrainian companies.

For instance, currently Coal Energy S.A. company has held its IPO on WSE. Company succeed in placing 25% of shares for 82.5M USD. However expected amount of funds raised was set at 130M USD mark. At the same time, as it has been announced several times, two major Ukrainian agricultural companies: Valinor and ViOil delayed their IPOs. Debt issues of U.S. and EU countries causes increased cautiousness of investors and decreases the amount of investments actually being available.

The second reason is over-saturation of WSE with Ukrainian companies. Especially, it is relevant for the agrarian sector. Several companies including IMC, KSG Agro and Ovostar Union successfully held their IPOs during this period. At the same time, several large Polish companies scheduled their IPOs for this period.

For example, large Polish facility - coal mine JSW (Jastrz?bska Spó?ka W?glowa) has managed to raise funds in the amount of 5.37Bn PLN (1.9Bn USD), which is the fourth-largest IPO of all times on WSE. It is becoming clear that investors are willing to take a break from large-scale higher-than-average risk investments.

Also, they would like to see positive trends from the companies that are already on the market. In case those companies prove to be successful, more investment opportunities will become available. As the matter of fact, it is possible that the demand for Ukrainian companies will rise by the end of fall 2011.

Currently there are several alternative options for Ukrianian companies in terms of IPO abroad. These include London platforms as well as NYSE Euronext, and Frankfurt Stock Exchange which were already deployed by IPOs of AgroGeneration and Continental Farmers Group.

However the main issue is that medium-sized companies will not be able to reach such level, therefore WSE will remain the main option. Thus Ukrainian companies will either have to acknowledge international investors more with their activities and advantages in general or prepare for fierce competition on WSE.

UkrAgroConsult