Warsaw IPOs Sour as AFI, Avia, Geo-Alliance Withdraw $449 Million of Deals

AFI Europe NV, a real-estate developer, postponed its initial public offering, the third company to drop plans for a Warsaw share sale as Poland said private pension funds may get less cash to invest.

AFI delayed the deal because of “unfavorable” market conditions, it said in an e-mail late yesterday. The company, controlled by Israeli billionaire Lev Leviev, had planned to raise about 130 million euros ($171 million) and start trading in the Polish capital around Dec. 9. The postponement followed announcements yesterday by Ukraine’s Geo-Alliance Oil-Gas Public Ltd. and Avia Solutions Group of Lithuania.

Poland may cut transfers to privately run pension funds, some of the largest domestic institutional investors, as it looks for ways to narrow the budget gap created by shifting employee contributions away from the state-run system, Finance Minister Jacek Rostowski said Nov. 30.

“The uncertainty over Polish pension reform didn’t help with achieving a satisfactory price,” Miroslaw Dziolko, a fund manager at Bank Millennium SA’s mutual fund, said by phone. “The IPO market has become saturated, and sentiment has soured because of Europe’s fiscal crisis,” Dziolko said.

Warsaw’s benchmark WIG20 Index rose 1 percent to 2,694.19 at 11:17 a.m., down 2.7 percent from its 2010 peak on Nov. 9.

Poland has had the most IPOs in central Europe each year since at least 2004, according to data compiled by Bloomberg. Sixty-five IPOs have raised a record $4.89 billion in 2010, the largest coming from state-run insurer PZU SA and utility Tauron Polska Energia SA. The Warsaw Stock Exchange’s own IPO in October drew record demand from institutional investors, which bid for more than 25 times the number of shares on offer.

‘Lack of Information’

“We don’t know what’s going to happen with the Polish pension funds, and a lack of information never helps when you’re investing,” Patryk Jablonowski, a fund manager at Deka Investment in Frankfurt, said by phone. “Some investors, maybe too hastily, drew a parallel to what happened in Hungary.”

Hungary’s government told its citizens last week to move their pension savings back to the state from privately managed funds or lose their government pensions. The directive is part of an effort to move 3 trillion forint ($14 billion) of assets managed by the funds into the state budget to reduce the deficit and public debt.

Europe’s fiscal crisis also hurt share sales in emerging markets, some of which were priced “too high,” and investors’ risk appetite is diminishing as the year ends, Jablonowski said.

Greece, Ireland

Global stocks dropped last month, pushing the MSCI World Index down 5.6 percent since its 2010 peak on Nov. 5, on concern the European sovereign-debt crisis that pushed Greece and Ireland to seek help is spreading.

AFI, Avia and Geo-Alliance join at least 16 companies worldwide that have postponed or canceled IPOs valued at $4.88 billion since the beginning of November, Bloomberg data show.

Geo-Alliance, controlled by Ukrainian billionaire Victor Pinchuk, had sought about 750 million zloty ($246 million), partly to finance drilling in Ukraine, Poland’s eastern neighbor.

It would have joined Ukrainian agricultural producers Agroton Public Ltd., Astarta Holding NV and Kernel Holding SA, already traded in Warsaw. Sadovaya Group SA, which mines coal in Ukraine, said yesterday it plans to raise $60 million to increase capacity from a Warsaw IPO this month.

On Nov. 26 Milkiland NV, a dairy company that operates in Russia and Ukraine, set its 211 million-zloty IPO price at 33.78 zloty a share, 26 percent below the maximum it had sought.

Avia, a Lithuanian provider of services for airlines that had planned to raise 98.7 million zloty, will now sell shares at the beginning of next year, the PAP newswire reported yesterday, citing a statement from the company.

To contact the reporter on this story: Maciej Martewicz in Warsaw at mmartewicz@bloomberg.net

To contact the editor responsible for this story: James Gomez at jagomez@bloomberg.net

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