When Piotr Chudzik returned to Warsaw in 1993 after two years studying in Canada, Poland’s post-communist privatization programme was just getting under way.
Western investment banks were desperately looking for bright young locals to help them navigate the new market and Chudzik fit the bill perfectly.
“They wanted people who had some exposure to western countries and weren’t tainted by the communist past,” he says.
He was snapped up by UK merchant bank Hambros, which was overseeing the sale of Poland’s pulp and paper assets.
“We were responsible for privatizing all the companies in the sector,” he says. “There was no internal capital, so we were trying to sell everything to foreign investors.”
Chudzik has high praise for the reformers who, under the aegis of economist-turned-politician Leszek Balcerowicz, led Poland’s early economic transition.
“From the beginning we had a good banking system and a transparent privatization process,” he says. “As a result, Polish assets ended up with quality investors as opposed to local oligarchs, as was the case in many other CEE [central and eastern European] countries.
“It was the same with the Polish stock exchange and the securities commission. They were set up by honest people who were focused on fixing the economy, not on getting wealthy.”
Chudzik – now managing partner of leading Polish investment bank Trigon – is less enthusiastic about recent reversals of some of the early reforms, particularly the hollowing out of Poland’s second-pillar pension funds.
“We had very strong capital markets in Poland until the pension changes in 2015, when some assets were moved out of the funds and the credibility of the model collapsed,” he says.
He is also critical of the decision to remove the requirement for the remaining pension funds to invest the majority of their cash in the local market.
“Previously, we saw a lot of foreign listings in Poland,” he says. “It made sense for mid-sized corporates from CEE and even western Europe to list in Warsaw, because that made them eligible for investment by Polish pension funds. That has all stopped now as well. At the moment the market is dead.”
That could change if Poland’s ruling Law and Justice Party deliver on recent promises to introduce a UK-style defined-contribution employee pension system.
“We need to wait and see what will come of this, but the hope is that it will create a new cohort of local investors,” says Chudzik. “There is a huge need for equity, particularly in the mid-cap segment, but at the moment those firms are shut out of the capital markets.”