Czech giant electrifies WSE

This is the Czech electrical-energy producer's second listing, since it is already traded on the Prague Stock Exchange, and its debut amplified the WSE's overall capitalization by 15 percent.

The Czechs received a royal welcome from the Warsaw Stock Exchange (WSE) on the day of their debut. The stock-exchange building was decorated with orange ribbons - the color of the company - and millions of CEZ logos. Treasury Minister Wojciech Jasiński said that he envied the fact that the Czechs have a consolidated and well-functioning company such as CEZ, and Ludwik Sobolewski, head of the WSE, repeatedly stressed the importance of the event.

"A company of such size and profile could have easily chosen to be listed in London or Frankfurt. Still, it chose Warsaw. The WSE is strong enough to absorb an enterprise of this size," he said.

Top dollar

CEZ is already listed on its domestic bourse. Although analysts were skeptical about the potential interest of Polish investors in buying CEZ shares, on Wednesday - the day of its debut - the turnover of the company's stock in Warsaw reached zł.250 million, while 1.04 million of the firm's shares changed hands. During that day, CEZ shares cost as much as zł.121.26 (CZK883.2), which is the highest price in the company's history. CEZ is more than likely to join the WIG20 index after the next correction. Its market capitalization amounts to zł.70 billion, which makes it the biggest company in Central and Eastern Europe. The value of the remaining companies listed on the WSE equals zł.500 billion.

Martin Roman, CEO of CEZ, doesn't hide the fact that he counts most on the interest of Polish institutional investors - especially the pension-fund industry, worth zł.240 billion - and says he opted for the Warsaw bourse because of his plans related to the Polish market. But CEZ is not likely to issue new shares soon in order to raise more money from the Warsaw floor.

"If at some point CEZ needs more funds, then of course we'll turn our attention to the Warsaw bourse. But currently, we've got over EUR 7 [zł.27.1] billion for further investments, and that's after the dividend payout, so some time will pass before we go to the stock exchange for more capital," Roman said.

Polish plans

A big part of CEZ's E7-billion budget could be spent on acquisitions in Poland if the Treasury Ministry finally decides to privatize its power companies. CEZ is interested in purchasing a 50-percent stake in power-plant complex Zespół Elektrowni Pštnów-Adamów-Konin, currently held by the State, but is waiting for the Ministry to reach an agreement with another current shareholder, Elektrim. Other power companies CEZ might be interested in are being consolidated by the Treasury Ministry.

"We hope to be able to propose a Polish power company to the investors next year," Treasury Minister Jasiński said.

Roman said CEZ could spend the entire R7 million in Poland if a good opportunity were to appear. "I'd rather we had a very strong position in one country than be present in many," he said. "We've already got the latest acquisitions here, the power plants in Skawina and Chorzów with a joint capacity of 800,000 MW. The entire Polish market is our priority and we'll be interested in other assets after the government makes a decision," he added.

Foreign expansion

CEZ has already got a 40-percent share in the Bulgarian energy market and is planning new acquisitions in Romania where it is eyeing both production and distribution companies. In the Czech Republic it has a 62-percent share of the energy market.

"We've got a very focused strategy. We're interested above all in the Central and Southeastern European markets," Roman said.

CEZ is controlled by the Czech Finance Ministry, which holds a 67.6-percent stake in the company, while 24.9 percent of the company's shares are owned by institutional investors and 7.5 percent by other investors. Among the institutional investors are well-known firms, such as Merrill Lynch, BNP Paribas, UBS, Pioneer and JP Morgan.

Last year the company's revenues reached CZK125 (zł.17) billion, with a net profit of CZK22.2 (zł.3.05) billion.

CEO:   Martin Roman

Strengths:

Largest firm in CEE

Attractive acquisition plans

 

Weaknesses:

High share price

Czech government may sell its stake