Israel's ITIT: Euro-denominated IPO possible next year
by Aleksander Nowacki
IT International Theatres (ITIT), the Israel-based multiplex operator, which runs the Polish Cinema City chain, is considering becoming the first foreign company to list shares denominated in foreign currency on the Warsaw Stock Exchange (WSE), Business Journal has learnt.
"We will look at the possibility of listing stock denominated in euros," says Israel Grindinger, the company's chief financial officer (CFO). He adds, however, that it is still too early to say anything definite about the company's possible WSE listing. "We have been considering a Warsaw IPO as an option for over a year, but it has not got beyond the stage of early planning." ITIT is currently in talks with "various Polish banks", both as IPO advisers and potential investors. "We think we can move things on to a practical level early next year," Grindinger adds. Should ITIT go ahead with its plans, it would become a small-to-midsized firm by the bourse's standards. Its revenues last year topped $84 million (€72.6 million).
The company's plans were given a boost by last week's successful WSE debut of Bank Austria CreditAnstalt (BA-CA) and the WSE board's announcement of plans to introduce forex-denominated listings.
"In technical terms we are ready (to introduce forex listings)," said Adam Maciejewski, trading department director at WSE. The Securities and Exchange Commission (KPWiG) is currently considering the application for a change in WSE's charter that would make such a move possible, he added. Maciejewski also said that there is no reason why such a product should not be introduced by the end of the year. It would benefit investors with foreign currency accounts, as they would not be exposed to exchange rate risk. However, it is unlikely that domestic investors would be interested in the project. He also said that it had been issuers, rather than investors, who had approached the exchange with enquiries about forex listings.
According to Maciejewski, several foreign companies and one potential domestic issuer have expressed a preliminary interest in such a product. Other euro-denominated products that could be offered on the Warsaw bourse include government bonds, as well as BPH PBK's corporate bonds, he said. The bank's press office did not return phone calls and e-mails seeking confirmation of such plans last week.
Piotr Chudzik, deputy CEO and head of corporate finance at Deutsche Bank, said that forex listings would be "a positive development," adding however, "that its beneficial effect could be offset by the introduction of capital gains tax." He also said that BA-CA's debut was welcome, as it seemed to indicate that procedural difficulties that some foreign companies have faced in the past have been overcome.
WSE's Maciejewski was skeptical as to how such products would be received by brokerages and his concern was confirmed by the CEO of a brokerage, who declined to be named.
"I don't know where the exchange wants to go with this product, or why they are planning to introduce it," he said. "It won't do anything for the market. The only euro-denominated product that would make sense on the WSE is government bonds."
ITIT is only one of several foreign companies considering following in BA-CA's footsteps in making a Warsaw bourse debut. Two Croatian firms, pharmaceutical company Pliva and Podravka, the Central and Eastern European region's largest food producer, also with a pharmaceuticals arm, are both contemplating a WSE listing. But neither returned calls seeking comment for this story last week. It is, however, said that their plans to list on WSE had run up against procedural obstacles in the past.
