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Dec 21, 2007 17:47 EEST
LJUBLJANA (Slovenia), December 21 (SeeNews) – The Slovenian capital market is hungry for new shares after the listing of the country’s second largest bank by assets, Nova Kreditna Banka Maribor (NKBM), created an appetite for initial public offerings (IPOs) following an eight-year fast, market analysts say.
More IPOs are expected on the bourse after NKBM’s successful listing and analysts believe that they will have even bigger success.
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NKBM gained 2.82% to an average price of 43.75 euro ($63.97) on Ljubljana Stock Exchange (LJSE) on Friday. NKBM shares have gained 19.5% since December 10, when they started trading on the LJSE.
Earlier this month the Slovenian government set the final price of NKBM's IPO at 27 euro per share, at the very top of the indicative price range. The IPO was the first held on the LJSE in eight years and market analysts forecast it would energise the stagnating bourse.
Not only has the bourse been starved of IPOs, which attract investors eager for quick returns, but there has also been a trend for LJSE companies to delist recently following consolidation of their ownership. Slovenia, which joined the European Union in 2004 and the eurozone at the beginning of 2007, set up the bourse in 1989. Analysts have said the LJSE urgently needs new companies and tie-ups with other bourses to grab investors’ interest and stay afloat.
“The thin market, limited offer of shares and low turnover, all these characteristics of the Slovenian capital market, contributed to the rise in the NKBM share price,” Marko Jovic, an analyst with local bank Abanka Vipa, told SeeNews.
“It is a question what will happen with NKBM. It is already a high price,” Jovic said, adding that the current market price was unjustified. “The rise should calm down first and after that a fall will probably follow,” he said.
Jovic found it difficult to say what levels NKBM’s share price will reach as the market already behaves irrationally. He said that mainly domestic institutional investors are buying NKBM shares.
“NKBM is rising further [...] Now it is about to reach the psychological barrier of 45 euro,” Franci Tusek, an analyst with local brokerage house Medvesek Pusnik, told SeeNews. Tusek expects NKBM to reach 45 euro in the following days and start falling afterwards.
“I think that there is too much free money on the market and too limited an offer [...] We are hungry for new investments,” he said.
Andraz Vrh, asset manager with Ilirika brokerage house, agreed: "The market is definitely hungry for IPOs." Vrh expects trading in NKBM shares to calm down soon and the bank to shed part of its recent gains in one of the following days.
“The bank went higher than I had expected [...] I cannot say that it is too expensive but it is not too cheap, either, and from a technical point of view some day profit taking will start [...] I think that it will happen soon,” Vrh told SeeNews.
“The rise was a result of the fact that numerous domestic investors, also institutional ones, didn’t get NKBM in the IPO, and those who did get, got little and bought additionally after that on the bourse,” Vrh said. “The interest was a lot higher than the offer,” he added.
Future IPOs on the LJSE are expected to have the same success as the one of the NKBM, or even higher, as individual investors have already gained some experience in participating in IPOs, analysts say.
“Good examples usually attract followers,” Medvesek Pusnik's Tusek said. He added that the Slovenians’ attitude to IPOs is very positive.
Analysts believe that after NKBM’s IPO the government will decide to privatise also other companies in the same way.
Ilirika’s Vrh said that he did not rule out the possibility of the government trying to repeat the success of NKBM's privatisation through an IPO of other companies.
“Not to sell the whole stake to a strategic partner, but to sell part of it to people and another part to a strategic investor, who will at the final stage place a buyout offer and in this way will buy the stake which people had bought from the state."
“Having in mind that it (NKBM's IPO) went well, this practice can go on,” Tusek said. He believes that the successful IPO of NKBM will also give a fresh impetus to some private companies to follow in the NKBM's footsteps.
“Some more time is needed for employers and private companies to feel the benefit of this [...] Some more time is needed before IPOs become a routine on our market,” he said.
($ = 0.68 euro)
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