Another chance to draw foreign capital opens up in Serbia.
By Biljana Pekusic for Southeast European Times in Belgrade -- 03/07/12
The Initial Public Offering initiative in Serbia will allow local companies to remain independent, but distribute shares to more investors. [Reuters]
Successful companies in Serbia could soon seek new investors through initial public offerings (IPOs) -- which would allow local companies to remain independent, but would distribute shares to a number of investors, rather than sell them to a strategic partner.
Financial experts warned that the IPO companies need a solid preparation of three to six months.
"It mostly depends on the complexity of the project and whether the shares are offered to domestic or foreign stock exchanges," Martin Hinteregger, the director of the Vienna-based corporate finance group Erste Bank, told SETimes.
Not all companies are suitable for a public offering of its shares. Investors usually look for IPO attractive industries and companies with a clearly defined and unique position that have a sustainable competitive advantage. Experts estimate there are 20 such companies in Serbia.
"Companies must be prepared to act as though they are public, meet all requirements for reporting and transparency, and prepare to share the control of the company with someone else," Marianne Rickl, assistant director of Erste Bank, told SETimes.
To have stock market access, companies will have to enlist through the Belgrade Stock Exchange Commission, and provide required documents.
Radoslav Mijuskovic, owner of Agromin, a company producing agricultural machinery and tools, told SETimes this is an excellent option for successful companies. His company exports to regional countries, but it's not enough to enter the stock market.
"I'm not afraid in part to give up ownership and responsibilities to new investors, but due to the global financial crisis right now, buyers are not buying stocks even in large companies," Mijuskovic said.
Despite the decline of stock market activity in the region, the Belgrade Stock Exchange is preparing to start the IPO. The new rules on the listing have been applied to the regulated securities market, where quality companies will be listed.
"Implementation of the rules on the listing of the Belgrade Stock Exchange is important because it introduces an additional line on the financial market," Jorgic Broker, a Serbian brokerage house, said.
IPOs are expected to strengthen the capital base and raise the Serbian companies to a higher level, as is the case in Croatia, where profitable companies have been offered on the public stock market for several years now.
Croatian oil company INA joined the Zagreb Stock Exchange in 2006, when the Croatian government decided to sell its 17% ownership. Today MOL Group, one of the leading oil companies in Central and Eastern Europe, has 47.16% of shares in INA.