Investor demand supports high price

Analysts estimate that Poland's largest initial public offer (IPO) this year at nearly zł.2.5 billion, would rank PGNiG as the ninth-largest company listed on the Warsaw Stock Exchange (WSE) with a market capitalization of zł.16.3 billion.

The last major central European gas group still fully in state hands is accepting subscriptions through September 15 for an issue of new shares, which will account for 15 percent of total shares and which are set to begin trading on September 23.

The sale has aroused opposition from the center-right parties expected to take power in elections, just two days after the debut, but few analysts admit to any deep concern.

"The price should be a bit below the high end of the range, to give some comfort to investors who may be disturbed by the political atmosphere around the company," said Sławomir Sklinda, analyst at bank BRE. "It's still rather expensive, but can investors really afford not to buy into such a big company?" he added.

PGNiG is expected to enter the blue-chip WIG 20 index, which many fund managers track when building their portfolios.

PGNiG holds a monopoly on the gas market but while it will keep control of its extraction and distribution business, its transmission assets are being leased, and will be eventually sold to a state company.

The centrist Civic Platform (PO) and right-wing Law and Justice (PiS), expected to form a coalition government, do not support the lease period, and have said that as soon as they are elected they will sell the transmission assets to the state-held firm.

They say this is necessary to protect Poland's energy security, but analysts have dismissed it as pre-election posturing.

"This is nothing new - elections are almost here. It's a big company in a fashionable sector, and demand will outweigh supply," said a fund manager with one Swiss fund.

Some say expected heavy demand from retail investors will also support the price. (Reuters)