Equity capital markets: Window of opportunity remains open for a while

  • Sufficient fund flows in 2005
  • Markets are receptive for the right story

The recent boom in equity capital market transactions in Central and Eastern Europe as well as in Austria seems to be going on. There is sufficient liquidity searching for investment opportunities, and the markets are receptive to attractive opportunities. Following a busy first half year, CA IB expects the second term to be as exciting. Most activity is to be expected in Poland and Turkey.

Favourable conditions in Central and Eastern Europe
“Above-average growth figures and modest market valuations are the ideal preconditions for issuers” explained Chris Perrin, Member of the Managing Board of CA IB Corporate Finance. After a number of idle years in the early 2000er’s, there has been a new rush on the bourses of Central and Eastern Europe. Bank Austria Creditanstalt’s IPO two years ago, with a dual listing in Vienna and Warsaw, was one of the triggers to this development.  

Investors increasingly come from Central and Eastern Europe, which mainly has to do with the emerging of pension funds. Bound to fierce restrictions about where to invest, these funds constantly search for opportunities in their home markets. High domestic demand even allows for purely domestic issues, such as Bioton in Poland.

Turkey has the best story of all
Of all transition stories in the emerging markets worldwide, Turkey offers one of the best. Investors’ interest in this country is enormous, with the Secondary Public Offering of Turkish Airlines and Petkim – both managed by CA IB and well oversubscribed – being just two examples. There are more equity capital markets transactions to be expected this year.

Risks include political interventions in Russia, which have damaged investor confidence there, and currency swings in Central Europe, especially related to budget and current account imbalances, as in Hungary. There is also a small chance of Cyprus or other issues preventing the start of Turkey’s EU accession talks in October.

Austria has “grown up”
“We are very optimistic about further equity capital markets transactions on the Vienna Stock Exchange”, said Klaus Requat, Member of the Managing Board of CA IB Corporate Finance. “There are some more issues to come during the next two to three months with a total volume of up to EUR 350m.” So far in 2005, CA IB (together with Bank Austria Creditanstalt) has been involved in transactions with a volume of EUR 1.2bn.

Strong company performance, CEE exposure and dividend payments have put Vienna into the limelight. The companies listed on the Vienna Stock Exchange know how to meet investor expectations. Thanks to its professional environment with strict compliance regulations and information requirements, Vienna has become a serious market within the past ten years.

Investors appreciate that the recent IPOs and SPOs primarily have been undertaken to fund ongoing international growth (e.g. Raiffeisen International, OMV, Wienerberger, SBO). In this respect Vienna differs a lot from other markets, which had seen defensive rights issues driven by balance sheet issues. 

About CA IB
CA IB is the Corporate Finance Advisory and Equity Capital Markets house of Bank Austria Creditanstalt, which is responsible for Austria and the Central & Eastern European region within the HVB Group. With its offices in 11 CEE countries, CA IB runs a widespread network that combines local expertise with international investment banking know how.

Inquiries: Bank Austria Creditanstalt International Markets
Veronika Fischer-Rief, Tel. +43 (0)5 05 05 82833;
e-mail: veronika.fischer-rief@ba-ca.com