Advent latest to hunt on Warsaw Exchange

Advent International has completed its tender offer for Wydawnictwa Szkolne i Pedagogiczne (WsiP), in a deal valuing the Polish educational publisher at PLN 405m (EUR 100m). The global buyout house offered PLN 17.15 per share back in November, and the offer period ended on 29 January.

The onset of the credit crunch had many pundits predict a swathe of take-privates as otherwise robust companies saw their share prices plummet. However this failed to ever truly materialise, with Permira's £225m Just Retirement take-private in the UK the largest last year, followed closely by EQT's EUR 210m take-private of HTL Strefa, which, like WsiP, was taken off the Polish exchange.

That deal marked the largest-ever private equity take-private on the exchange and EQT's first foray into Poland. The end of 2008 saw one of the first deals by a private equity firm on the Warsaw market when Enterprise Investors led a PLN 480m PIPE deal in beverage producer Kofola-Hoop for a 42.6% stake.

Poland's prospects are better than many other countries in Europe - Tod Kersten, managing director at Close Brothers

So, why all the hoopla over the Warsaw Exchange?

"Poland's prospects are better than many other countries in Europe," comments Tod Kersten, managing director at Close Brothers, which opened an office in Warsaw at the end of last year. He goes on to assert that the fact that the country never officially entered recession made it an attractive economic prospect, while it's "increasingly clear squeeze-down provisions to buyout minority investors have made take-privates more appealing in the last five years".

"All things considered, it's the best-performing economy in the EU."

Kersten envisages another couple of take-privates this year. "Significant attention is and will be paid to Warsaw-listed companies from buyout houses as they seek out businesses that could benefit from efficient private equity management."

The bourse punches above its weight, ranking among Europe's busiest - depending on the year and measure - and is now a force to be reckoned with (see table). To boot, it's clearly the hub for Central and Eastern Europe.

According to Kersten, some of this is down to simplification. "It is often said that pursuing an IPO on Warsaw is basically like a private placement to just half a dozen investors. It makes book-building a lot simpler."

This is because Polish pension funds are forced to invest more than 90% of their money into businesses listed on the WSE. There has long been talk of changing this. "There has been some liberalisation but the authorities are very cautious about letting them invest elsewhere, which is the right thing to do."

And which means the WSE is likely to remain a hot destination - to sell and buy - for the foreseeable future.

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