The Prague Stock Exchange, which had been more or less comatose for years, sprang into life thanks to the $211 million IPO from generic drugs maker Zentiva. It was the first IPO on the exchange for a decade.
The deal was lead managed internationally by Merrill Lynch, and locally by Wood & Co. It was priced at Kc485, at the high end of the original price talk of Kc400 to Kc525 and it traded up about 5% in first trading.
Ian Carton, managing director of ECM at Merrill Lynch, says the international book included emerging-market investors but also healthcare investors. ?Generic drug manufacturers are the sweet spot of pharmaceuticals right now,? he says.
The company has the best brand recognition of any pharma in the Czech and Slovak republics, partly because it used to be a state company, called Leciva. It was bought in 1998 in a management buyout.
About 20% of the deal was sold to Czechs. The IPO was an important event for the exchange, which has become accustomed to delistings rather than new issues. About 1,500 companies were required to list, of which more than 1,000 later delisted. Some foreign companies that bought Czech firms have also delisted their acquisitions, to avoid problems with minority investors.
An exception is Erste Bank, which listed itself after buying and delisting Ceska Sporitelna. Erste Bank has been one of the most successful listings on the exchange.
The government has not helped. Vladimir Jaros, corporate finance partner at Wood & Co, says: ?One reason [for the lack of IPOs] is that governments have not been very supportive of the capital markets, because they haven’t floated privatizations. In the Czech Republic, the privatizations have always been through direct investment.?
Despite the lack of activity on the exchange, Zentiva was able to list because it is big and well known. But investors shouldn’t expect a sudden rush of new Czech IPOs. Jaros says: ?If we have a deal of this size once a year, that would be great.?
