Lotos debut fails to impress key players
Shares of Poland's second-largest oil group, Grupa Lotos, got off to an impressive start on their first day of trading last Thursday, opening at zł.32 - more than 10 percent higher than the IPO price of zł.29.
Enthusiasm then subsided, and shares fluctuated between zł.30-31 until finally ending the session at zł.30.20 - four percent higher than the IPO price. Though the tranche for private investors - 8.8 million shares - was heavily oversubscribed, demand from institutional investors was weaker.
"The feedback that we had from institutional customers was that they were expecting a lower price in the IPO. Institutions were not satisfied with zł.29," says Sebastian Siejko, director of the sales department at CA IB.
The market had expected a price of around zł.27, but a few days before the flotation, Lotos's majority shareholder, state-owned oil holding company Nafta Polska (NP), announced that it wouldn't release its 8.9 million shares at the debut. The reduction trimmed the issue by 20 percent, artificially boosting demand, and allowing Lotos to offer a higher price at its IPO.
"My feeling is that those guys felt the book was rather weak," says Siejko, adding: "Definitely the state chose to close the book at the highest possible price."
The weak demand for Lotos shares was taken by some as a signal that Treasury Minister Jacek Socha had made the right decision in delaying the sale of state gas giant PGNiG until autumn, from the originally scheduled date of July 4. Socha had said that the market would be too saturated by the flotation of two large companies so close together, lowering the share price of both companies. Siejko, however, says an earlier PGNiG debut wouldn't have affected demand.
"Investors prepared themselves for [PGNiG's] IPO. Some of them even consider that IPO to be even more interesting than that of Lotos."
The government has indicated that it is interested in selling another 25 percent of Lotos to a strategic investor, probably after September's parliamentary elections. After the debut, the state now holds a 51.9-percent stake in Lotos through NP, and 6.9 percent directly.
Enthusiasm then subsided, and shares fluctuated between zł.30-31 until finally ending the session at zł.30.20 - four percent higher than the IPO price. Though the tranche for private investors - 8.8 million shares - was heavily oversubscribed, demand from institutional investors was weaker.
"The feedback that we had from institutional customers was that they were expecting a lower price in the IPO. Institutions were not satisfied with zł.29," says Sebastian Siejko, director of the sales department at CA IB.
The market had expected a price of around zł.27, but a few days before the flotation, Lotos's majority shareholder, state-owned oil holding company Nafta Polska (NP), announced that it wouldn't release its 8.9 million shares at the debut. The reduction trimmed the issue by 20 percent, artificially boosting demand, and allowing Lotos to offer a higher price at its IPO.
"My feeling is that those guys felt the book was rather weak," says Siejko, adding: "Definitely the state chose to close the book at the highest possible price."
The weak demand for Lotos shares was taken by some as a signal that Treasury Minister Jacek Socha had made the right decision in delaying the sale of state gas giant PGNiG until autumn, from the originally scheduled date of July 4. Socha had said that the market would be too saturated by the flotation of two large companies so close together, lowering the share price of both companies. Siejko, however, says an earlier PGNiG debut wouldn't have affected demand.
"Investors prepared themselves for [PGNiG's] IPO. Some of them even consider that IPO to be even more interesting than that of Lotos."
The government has indicated that it is interested in selling another 25 percent of Lotos to a strategic investor, probably after September's parliamentary elections. After the debut, the state now holds a 51.9-percent stake in Lotos through NP, and 6.9 percent directly.
