Multimedia Cancels Biggest Polish IPO in 5 Months on Weak Demand

Multimedia Polska SA, Poland’s third-largest cable TV operator, dropped plans to sell as much as 948.3 million zloty ($312 million) of shares in an initial public offering, citing weak demand for its stock.

Its owners, including Tomasz Ulatowski and Ygal Ozechov, sought to sell a 49 percent stake in what was set to be the country’s biggest IPO since Energa SA’s 2.17 billion-zloty offer in December. The shareholders delisted the Gdynia-based company from the Warsaw bourse in 2011, taking advantage of its low valuation and starting a search for an industry investor.

Investors cut activity on Poland’s stock exchange, the biggest in central Europe, this year amid uncertainty about the country’s pension fund changes and crisis in neighboring Ukraine. The market’s total stock turnover shrank 11 percent in the first four months of 2014 from a year earlier, according to the latest data published on the bourse’s website.

“It looks like pension funds weren’t interested in the offering, waiting for the outcome of the pension overhaul,” Dawid Czopek, who helps manage the equivalent of $658 million at MWealth Management SA in Warsaw, said by phone today. “As these funds invest more and more abroad foreign investors may fear the overhaul won’t be supportive for Polish stocks.”

Poland this year stripped privately-run pension funds of their government bond holdings to curb public debt and gave Poles until the end of July to decide whether they want to continue allocating part of their pay to funds or switch to the state pension system. The government also doubled the limit on the funds’ foreign investment to 10 percent of assets this year.

Pension Changes

“I don’t expect any big IPO to take place in Warsaw as long as there is uncertainty about pension funds while cash flows into domestic mutual funds are volatile,” Czopek said.

In February, Slovak utility GGE AS suspended its Warsaw’s 190 million-zloty IPO. Chinese automotive parts producer JJ Auto AG (JJO) this week lowered the upper end of its IPO price range by 17 percent and extended the offering period.

Warsaw’s all-shares WIG Index (WIG) has gained 0.7 percent in dollar terms this year, underperforming MSCI Emerging Markets gauge, which has advanced 3.6 percent.

Multimedia competes for TV subscribers with local units of Liberty Global Plc and Vivendi SA, and for Internet users with companies such as Orange SA. Warburg Pincus LLC became a strategic minority investor last year in Inea SA, the fourth-largest Polish cable operator.

Consolidation Plans

“Our growth plan remains unchanged,” Multimedia Chief Executive Officer Andrzej Rogowski, said in an e-mailed statement today. “We still seek to consolidate the market.”

From 2011 to 2013, Multimedia increased sales 12 percent as it boosted its customer base, while net income dropped 31 percent. In the first three months of 2014 profit fell further, by 12 percent to 12.6 million zloty.

In 2012, Multimedia hired JPMorgan Chase & Co. to help it find a buyer and dropped the plan the same year.

UBS AG was the IPO’s global coordinator and bookrunner. UniCredit SpA was a joint bookrunner and offering agent while Raiffeisen Centrobank AG was acting as a joint lead manager, according to Multimedia’s prospectus.

To contact the reporter on this story: Piotr Bujnicki in Warsaw at pbujnicki@bloomberg.net

To contact the editors responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net Pawel Kozlowski, Andrea Dudik

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