Initial public offering made by the Ukrainian companies in the Warsaw Stock Exchange

Development of the economy and increase of the investment image of Ukraine are indissolubly related to attraction of long-term investments into the national business. This issue became extremely topical for the Ukrainian companies in search of effective sources of investments for further development.

Thus, the purpose of this analysis is the determination of the IPO floatation as one of the best instruments of business financing from the point of view of either value of financial resources or activation and rationalization of company business processes and increase of corporate culture and discipline. By the IPO floatation the companies pursue a single objective is to get immediate access to advantages offered by the open market within the shortest possible time.

The national fund market is classified among emerging markets and, despite positive dynamics, a range of barriers for the internal IPO still exists. That is the reason for the national companies to search opportunities for public offering in the world stock exchanges, particularly – in the Warsaw Stock Exchange (Table 1).

  Table 1

IPO Statistics of the Ukrainian Companies in the Warsaw Stock Exchange

Year	Issuer	Sphere	Amount of funds attracted, USD m	Issuer’s jurisdiction	Investment bank
2013	Cereal Planet	Agriculture	141	Cyprus	Top Consulting
2012	KDM Shipping	Logistics	8	Cyprus	KBC Securities
2011	Coal Energy	Metallurgy	79	Luxembourg	Dragon Capital
2011	Ovostar	Agriculture	33	the Netherlands	BIC Securities
2011	VESTA	Manufacturing	48	Luxembourg	BG Trading
2011	IMK	Agriculture	30	Luxembourg	ING Bank
2011	KSG Agro	Agriculture	38	Luxembourg	Visum Capital
2010	Sadovaya Group	Metallurgy	33	Luxembourg	BG Trading
2010	Milkyland	Food industry	78	the Netherlands	UniCredit Bank
2010	Agroton	Agriculture	53	Cyprus	Phoenix Capital
2010	Agroliga	Agriculture	1,4	Great Britain	ACM
2007	Kernel	Agriculture	220	Cyprus	ING Bank
2006	Astarta-Kyiv	Agriculture	32	the Netherlands	ING Bank, ING Securities

Source: drawn up by the author on the basis of [2, p.4-p.5, 3]

Hence, the initial public offering in international stock markets is a completely new practice for the Ukrainian companies due to the listing costliness and necessity of bringing of corporate management rules into compliance with international standards. The Ukrainian companies made the first initial public offerings in 2005 in the London Alternative Investment Market (London AIM). There were such companies as XXI Century Investments (USD 138.7 m), Cardinal Resources (USD 20.17 m) and Ukrproduct Group (USD 11 m) among them.

Analysis of the stock floatation structure of the companies which made the IPO in the leading European Stock Exchanges (Figure 1) suggests that the best dynamics was inherent to quotation of stocks of Astarta Holdings and Kernel Holding, which floated in the main market of the Warsaw Stock Exchange. As a result of the IPO floatation Astarta Holdings managed to attract USD 31 mln through the IPO and Kernel Holding – USD 221 mln [1, p. 551].

Taking the primary conditions for IPO floatation into consideration, the Warsaw Stock Exchange offers massive opportunities for development to the companies being at different development stages. Particularly, not only big and medium businesses, but also small businesses with high development potential do have an opportunity to get funds for project implementation. Apart from the main market a New Connect Market also exists that is a market for small companies with firm position, which float for a narrow group of investors. No wonder then that this is the Warsaw Stock Exchange, which the national companies use most often to float to the IPO (Figure 1).

Figure 1. IPO Structure of the Ukrainian Companies in the World Stock Exchanges, %

Source: drawn up by the author on the basis of [2, p. 2]

However, during the last 3 years there were not made any IPO by Ukrainian companies neither on the WSE nor other stock exchanges due to the political crisis in Ukraine and conflict with Russia. In addition, several huge bankruptcies of Ukrainian agricultural companies such as Mriya, Sintal, Kreativ left a decent reputational damage and losses to Ukrainian companies from the point of investment attractiveness.

Warsaw Stock Exchange is one of the best options for public offering of stocks of the Ukrainian issuers as evidenced by financial success of the national companies, which had already made their offers, and general positive development dynamics of the stock exchange. It should be noted that availability of 2 markets in the Warsaw Stock Exchange makes it much easier for young companies with low financial resources to get funds. In spite of the fact that most national companies are still not ready to do public business and comply with every corporate management requirement, the examples of successful flotations of the Ukrainian companies in the world markets bring a hope for prospective development of this direction in the future.

List of References

1.Starostenko H. H. Initial Public Offering of Stocks in the Warsaw Stock Exchange: the Ukrainian View / H. H. Starostenko, Ye. O. Torshyn // Publication of scientific researches of the National University of Tax Service of Ukraine. – 2011. – No. 1. – p. 549–p.558.

2. IPO Review of the Ukrainian Companies 2013 – PWC capital markets [digital resource]. – Access mode:http://www.pwc.com/en_UA/ua/services/capital-markets/assets/an_overview_of_ukranian_ipos_rus.pdf.pdf – Screen name.

3.Issuer’s Manual – WSE IPO Factory [digital resource]. – Access mode: http://www.ipowse.com.ua/images/media/presentation_ukr.ppt. – Screen name.