Scrapped Utility IPO Dents Hopes for Prague Exchange Revival

Updated on
  • Czech energy group EPH cancels plan to float unit this quarter
  • Bourse expects GE's bank unit to start trading May 6 after IPO

Czech energy group Energeticky a Prumyslovy Holding AS scrapped plans to sell shares in its unit on the Prague Stock Exchange, weakening the chances of a revival in equity offerings and trading on the bourse.

EPH, which two weeks ago announced an intention to float a minority stake in EP Infrastructure AS in Prague and London, said on Wednesday it “would consider a bilateral transaction with global infrastructure investors” instead. Joe Cook, a spokesman for the company, declined to comment on potential buyers when contacted by phone.

Analysts and investors had said the share sale, along with General Electric Co.’s planned initial public offering of its Czech banking business, could boost the country’s stock market after delistings and falling prices cut its total capitalization by 67 percent over the past eight years. The bourse’s Chief Executive Officer Petr Koblic said this week that the mere announcements of the transactions could inspire more equity offerings in the future.

“It’s obviously negative news for the Prague bourse,” said Miroslav Frayer, an equity analyst at Komercni Banka AS. “Let’s just hope GE won’t make a similar move and that the shares of its local unit will start trading next Friday.”

Bank IPO

GE plans to sell a 51 percent stake in GE Money Bank AS for as much as 22.15 billion koruna ($928 million), with a 15 percent over-allotment option. The stock exchange said Wednesday it expects the company to start trading on May 6, which would end an eight-year spell of less than one Czech IPO per year, with none raising more than $100 million.

The Prague bourse now has 24 listings, compared with 483 equities on the Warsaw Stock Exchange’s main floor alone. Two of the five largest companies traded in Prague are cross-listings from Vienna that jointly account for over 31 percent of the PX index’s weighting.

EPH’s original plan to float EPIF would have enlarged the market with a company that has assets valued at 9.7 billion euros ($11 billion) and which generated a 2015 net income of 622.7 million euros on 3.27 billion euros of revenue.

“We appreciate the fact that EPIF considered an IPO on the Prague Stock Exchange,” bourse CEO Koblic said by e-mail. “We understand it as a clear signal for others that this option is relevant for local corporations.”