Trump, Brexit Swings to Benefit Polish Broker XTB Starting IPO

  • XTB founder says global volatility may boost broker's results
  • Share sale of up to $56 million is biggest Warsaw IPO in year

X-Trade Brokers Dom Maklerski SA, central and eastern Europe’s largest online foreign-exchange platform that is selling its shares in Warsaw, says it would take potential spikes in global volatility in its stride and bolster its earnings.

XXZW Investment Group SA, a company controlled by XTB founder Jakub Zablocki, is selling as much as 16.43 million shares, or a 14 percent holding, at a maximum price of 13 zloty apiece, according to the prospectus on the company’s website. That gives the offering a tag price of as much as 213.6 million zloty ($56 million), positioning it to become the biggest IPO in Warsaw since car-parts manufacturer UniWheels AG and its owners sold 504 million zloty of shares in April last year.

“Volatility was back in 2015, which had an impact on XTB earnings,” Zablocki said at a press conference in Warsaw. “Big things may also happen this year, such as Brexit or Donald Trump’s win” in U.S. presidential elections, which “may impact financial markets and boost efficiency of our business and help increase our revenue. For a broker like XTB and its clients, these are the tailwinds.”

XTB started its services in 2004, offering contracts for difference on various currencies and securities, a cheaper and leveraged alternative to stock exchange trading. The company posted 119 million zloty of consolidated profit last year and seeks to pay a dividend from 50 to 100 percent of its standalone profit.

IPO Awakening

The XTB offering may also help rekindle the country’s stock market as more companies are testing investors’ appetite for riskier assets. Warsaw Stock Exchange is seeing a new wave of companies, including i2 Development SA, Master Pharm SA and Polski Bank Komorek Macierzystych SA, which are seeking to tap investors after a drought in IPOs last year.

As Warsaw’s main stock gauge WIG20 Index gained 4.7 percent so far this year following a 20 percent slump in 2015, valuations are turning increasingly attractive for potential sellers while ultra-low interest rates push investors on the look-out for higher-yielding assets. This emerging pattern is also visible in the Czech Republic, where General Electric Co. and energy group Energeticky a Prumyslovy Holding AS this week announced plans to sell stakes in their Czech businesses in what would be the biggest IPOs through Prague’s bourse in eight years.

“Entering the stock exchange would boost our credibility, including potential institutional clients,” according to Zablocki. “Being a publicly traded company may also help us in taking over other European companies.”

Zablocki, 40, is a former currency trader at the Polish unit of Commerzbank AG and the founder of XTB. In 2010, he sold a minority stake to Enterprise Investors, the country’s largest private-equity firm for 224 million zloty. The fund pledged not to unload its holding as it wants to “remain a significant minority shareholder in this dynamically growing company,” it said earlier this month. Enterprise, which now owns 19 percent stake of XTB, has a 180-day lock-up, while Zablocki declared he won’t sell more of his shares within 540 days.

J.P. Morgan Chase & Co., UniCredit SpA, Pekao Investment Banking SA and Ipopema Securities SA are managing the sale. The book-building that started on Thursday will end on April 26.

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