By Marta Waldoch and Pawel Kozlowski
March 26 (Bloomberg) -- New York. London. Warsaw?
The Polish capital is luring international investment banks, including Goldman Sachs Group Inc., the world’s most profitable, as the government prepares record share offerings this year.
Goldman, based in New York, is seeking to open a branch office in Warsaw, spokeswoman Monika Schaller said yesterday.
Credit Suisse Group AG of Zurich announced in January a plan to open a brokerage this year after shuttering its Warsaw stock- dealing business in 2003.
"The government has a very ambitious plan to make Warsaw a financial hub for the region and expects foreign banks to establish a local presence," Marek Gul, who heads Credit Suisse’s business in Warsaw, said in an interview. "Investment banks that aren’t yet here want to get in."
The main lure is advisory work for the Polish government, which plans to sell stakes this year in its energy, insurance, chemical and phone companies to raise $10 billion to finance the widening budget deficit. The growing economy, the only one in the European Union to avoid a recession, and the Warsaw Stock Exchange, where the total value of listed companies has tripled since 2003, are also attractive, bankers said.
"It’s no wonder foreign banks are coming to Poland," said Kazimierz Szpak, who helps manage the equivalent of $1.6 billion at KBC TFI SA, a Warsaw-based mutual fund. "The Treasury is selling stakes, boosting the free float of many stocks, and generally, turnover is on the rise. This has been noticed."
Poland’s main WIG20 Index of stocks climbed 0.5 percent to
2,506.91 at 10:26 a.m. in Warsaw, extending this year’s gain to
4.9 percent. The measure surged 33 percent in 2009.
Lower Fees
Credit Suisse, Goldman Sachs and New York-based JPMorgan Chase & Co. are among international banks vying with local firms for underwriting and advisory work even though fees in Poland are typically lower than those in western Europe and the U.S.
The government agreed to pay 0.8 percent to bookrunners including Credit Suisse, Citigroup Inc. and UniCredit SpA this year on the sale of a 16 percent stake in Enea, the nation’s third-biggest power utility, according to a statement. The banks can also earn a 0.3 percent bonus. That compares with average fees of 3.8 percent on equity offerings in the U.S. this year, data compiled by Bloomberg show.
Deutsche Bank AG, UniCredit and Bank of America Merrill Lynch charged a combined 0.5 percent in fees for managing a 5.13 billion zloty ($1.76 billion) rights offering of PKO SA, Poland’s largest bank, in October, according to a regulatory filing. In Europe, fees for rights offers ranged from about 2 percent to as high as 3.25 percent for HSBC Holdings Plc’s $18.3 billion sale in March.
Poland’s government is urging banks to set up shop in Warsaw if they want business from the state.
‘Commitment to Market’
"When picking banks to advise us on privatization deals, we consider their commitment to the market," said Maciej Wewior, a spokesman for the Treasury Ministry.
The government plans this year to sell an additional 10 percent of PGE SA, the country’s biggest power producer. PZU SA, the state-owned insurer, may sell 5 billion zloty of shares in an IPO next month, and the government also plans to sell more than 25 percent in utility Tauron Polska Energia SA in the first half of the year. The Warsaw bourse may also go public after the state dropped plans to sell the market operator to a competitor last year, according to the government.
JPMorgan, which has offices in Warsaw and Moscow, was hired last month to lead the sale of the government’s 32 percent stake in Mennica Polska SA, the sole supplier of coins to the country’s central bank. JPMorgan intends to take part in most of the tenders for managing asset sales, including PGE, said Cezary Stypulkowski, head of operations in central Europe.
‘Privatization Pipeline’
"Our ambition is to be present in the new privatization pipeline in Poland," Stypulkowski said in an interview in Warsaw last month. "It is imperative to have a strong presence here."
Goldman Sachs filed an application with the U.K. Financial Services Authority on March 24 to open a branch in Warsaw, its eighth in Europe, the Middle East and Africa, Anna Krajewska, a spokeswoman for the company at NBS Public Relations in the Polish capital, said by phone.
"The strength and size of the economy is what makes the market attractive," Schaller, a spokeswoman for Goldman Sachs in Frankfurt, said by phone yesterday. She declined to say how many employees the bank plans to have in Warsaw.
Credit Suisse has an empty trading floor in the center of the Polish capital and plans to fill it by June, said Gul, who also declined to elaborate on the bank’s hiring plan. Raiffeisen International Bank Holding AG, the Austrian lender that operates in 17 former communist countries in eastern Europe, also plans to reopen a brokerage, Marcin Jedlinski, a spokesman at the Austrian bank in Warsaw, said by phone today.
Warsaw Stock Exchange
Pension funds, created in 1999, and mutual funds are among the biggest investors on the Warsaw Stock Exchange, together managing 275 billion zloty of assets in February, according to data from the financial regulator and the Mutual Funds’ Chamber.
The total value of listed companies on the Warsaw Stock Exchange tripled to $153 billion since 2003, according to the bourse’s data. The market’s average daily turnover jumped more than four-fold to around 1.4 billion zloty in the period.
Warsaw hosted 1.59 billion euros ($2.2 billion) of IPOs last year, placing it third in Europe behind NYSE Euronext and the London Stock Exchange as the government sped up its asset sale program, according to PricewaterhouseCoopers LLP statistics cited on the Warsaw bourse’s Web site.
"We’re seeing more and more large offerings and local financial institutions have become big enough that it’s worth doing stock-broking business for them alone," said Gul at Credit Suisse.
Tue May 03, 2016 9:51 am by Andrea ForexMart
Subject: Goldman Joins Race for $10 Billion Polish Asset Sales (Update1) 
