Poland Seeks $271 Million in PAK Sale, Biggest IPO in Year
Poland is seeking to raise as much as 858 million zloty ($271 million) from the sale of its 50 percent stake in ZE PAK SA utility in what is set to be the country’s largest initial public offering in more than a year.
The government, which offers 26 million shares, set the maximum price for individual investors at 33 zloty a share, according to an IPO prospectus published on PAK’s website today. The price range for institutional investors, who can place bids until Oct. 22, was set at 26 zloty to 33 zloty, according to the terms obtained by Bloomberg News today.
“The price looks attractive near the lower end of the range,” Adam Drozdowski, who helps manage the equivalent of $275 million at Axa TFI SA in Warsaw, said by phone. “This is a restructuring story and there’s lots of risk after the company bought coal mining assets this year.”
The IPO is set to be the biggest in Warsaw since the 5.37 billion-zloty sale of state-owned coal mine Jastrzebska Spolka Weglowa SA (JSW) in June 2011. The government has raised 8.12 billion zloty from asset sales this year to help finance the budget deficit, compared with its full-year goal of 10 billion zloty. In July Poland sold PAK two coal mines for 175.5 million zloty.
Billionaire Zygmunt Solorz-Zak owns 49 percent of PAK and plans to raise his stake to 51.7 percent in the IPO, according to the company’s presentation in Warsaw today. Solorz-Zak pledged not to sell his holding for 180 days after the IPO.
The Konin, Poland-based company will start trading on the Warsaw Stock Exchange on Oct. 30, becoming the fourth-largest Polish power producer on the bourse after PGE SA (PGE), Tauron Polska Energia SA (TPE) and Enea SA. (ENA) The final price that investors will pay for PAK will be set on Oct. 22, according to the prospectus.
PGE shares sank 2.5 percent to 17.56 zloty at 2:30 p.m. in Warsaw, heading for the lowest close since May 25, while Tauron lost 2.7 percent to a two-month low of 4.71 zloty as PAK’s sale was priced below the industry’s valuation.
Based on the IPO price range, PAK is valued at 1.35 billion zloty to 1.71 billion zloty, or 4.3 times to 5.4 times earnings seen this year. PGE currently trades 8 times profit, while Tauron is valued 6.8 times earnings, according to data compiled by Bloomberg.
PAK, which has 2,462 megawatts of installed generation capacity, posted net income of 214.4 million zloty on sales of 1.28 billion zloty in the first half of the year. The company expects its net income in 2012 to be “close to” last year’s 317 million zloty, Chief Executive Officer Katarzyna Muszkat said at a news conference today.
The company plans to spend 1.6 billion zloty by 2015 to upgrade its Patnow plant and a further 2.8 billion zloty to build two gas-fired units, it said in the prospectus.
Credit Suisse Group AG, ING Groep NV, JPMorgan & Chase Co. and UniCredit SpA are global coordinators for the sale, while Espirito Santo Investment Bank, Ipopema Securities SA, Trigon Dom Maklerski SA and PKO Bank Polski SA are joint book runners.
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