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Equity markets

Brokerage industry shakeup seen after UniCredito, HVB merger

Planned merger between Italy's UniCredito and Germany's HVB group could bring major changes for the Polish brokerage industry. Between them, UniCredito and HVB subsidiaries control three major Polish stockbrokers, CDM Pekao, BM Banku BPH and CA IB Securities. Combining the three would produce Poland's biggest brokerage house, with almost 40 percent of the country's retail accounts, no. 1 position on the IPO market and a very strong presence on the market for corporate investment services. The three brokers posted combined earnings of more than 125 million zloty last year, generating about half of total brokerage industry profits in 2004.

'It will be huge. It's rare for a company to have that kind of a market share', Maria Dobrowolska, the head of Polish Association of Brokerage Houses said. Ms. Dobrowolska says a combined CDM Pekao, BM Banku BPH and CA IB Securities would be able to dictate its terms for clients and competitors alike. Jarosław Dominiak from the Polish Association of Retail Investors says many people may leave the new stockbroker because integrating different IT systems may affect customer service levels.

Building materials

Opoczno IPO priced at 55 zloty

Shareholders Opoczno SA have decided to cut the IPO size of Poland's biggest ceramic-tile maker, setting the selling price near the bottom of the initial pricing range. Two funds controlled by Credit Suisse First Boston and by private equity fund Enterprise Investors reduced the size of this year's second largest IPO from 16.3 to just 8.3 million shares, priced at 55 zloty each. Opoczno said earlier the IPO price would be set between 54.7 and 69.9 zloty.

CSFB sold all of its shares controlled through Credit Suisse First Boston Ceramic Partners fund, while Enterprise Investors, a US investment group said it would wait at least until next year before selling its stake.

'Our partner has sold all of his shares but we decided we won't sell even one share at that price. At 55 zloty, Opoczno's price earnings ratio is just 12. All of their competitors are trading at much higher levels', Enterprise partner Ryszard Wojtkowski said.

Retailing

Neonet to go public next month

Home appliance retailer Neonet SA says it plans to go public as early as next month, rushing to do an IPO before several competing firms. Marek Majewski, Neonet chief executive and key shareholder says the company plans to invest IPO proceeds to boost its market share to as much as 10 percent by the end of 2005. Neonet, which runs over 350 home appliance stores spread across smaller Polish towns, now controls about 8 percent of the market. Wrocław-based company reported sales of nearly 490 million zloty last year. Earnings totaled 9.2 million zloty.

Information technology

Comp buys another IT security company

Encryption device maker Comp SA said it has agreed to pay 6 million zloty for all outstanding shares of the privately held Enigma Systemy Ochrony Informacji, a small, Warsaw-based software house making security-related applications. Comp, which plans to pay for its most recent acquisition using funds raised in a secondary offering scheduled later this month, said the price might go up if Enigma's profits are greater than 1.4 million zloty.

Also earlier this week Comp said it has sold its 60 percent stake in Torn, an IT security consulting firm it said doesn't fit its operating profile. Comp sold its shares to Torn owner Tomasz Dec for an estimated 1.67 million zloty, posting a 1.17 zloty gain on its investment. It paid just 0.5 million zloty in mid-2001.

Banking

Pekao, BPH merger expectations are too high, some analysts sayUpcoming merger of two major Polish lenders, Pekao SA and Bank BPH, a by-product of the friendly takeover of HVB Group by Italy's UniCredito, may well end up generating less synergies than is generally expected, some equity analysts say. Much of the cost-cutting at both BPH and at Pekao has already been done during previous mergers with smaller regional lenders while their revenue growth in recent years trailed inflation despite attempts to increase sales.