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Dual listings as a way to manage downturn impact whilst effectively raising funds

31 January 2023 | Knowledge, News, The Right Focus

Why is it worth Polish companies seeking capital in foreign markets

For Polish companies, a dual listing brings prestige, money and opportunities for international growth. It is a chance to build global brands and achieve the best competitive position, but also to enhance liquidity and raise money for bold investments and necessary acquisitions. For many companies today, it may be the only way to survive the coming crisis. And it’s a path on which it is good to have a trusted advisor and an experienced guide, as well as a seasoned player whose contacts, relationships and know-how will guarantee the success of the entire venture.

Polish companies forced into growth

Polish businesses are redefining themselves. And they are doing so in the context of both the threats and opportunities presented by global, dynamically changing markets. Aware that growth is the only way to escape the effects of the downturn, they are aggressively seeking new areas of investment and funding. Seeking and successfully raising funds on foreign stock exchanges is one of the most attractive directions and a good strategy for building a competitive edge. Take the London Stock Exchange, for example.

The London Stock Exchange – a natural destination for Polish companies

The London Stock Exchange (LSE) is one of the oldest stock exchanges and one of the largest in the world in terms of turnover.

A listing on the LSE raises company profile, becoming more attractive to investors and capital providers, allowing companies to grow faster and more smoothly. The fact that the LSE ensures much greater transparency of information than the Warsaw Stock Exchange (WSE) is of great importance and has a significant impact on the image of a London-listed company. This means meeting a number of notification obligations and maintaining high standards of transparency. Investors can be confident that LSE-listed companies meet these higher standards, giving them an edge over companies listed on other markets.

A London listing can be interesting not only for those Polish companies that are already home-listed (through dual listing), but also for those which have not gone public yet and are planning to make an IPO and are considering listing on a foreign exchange. This is because an IPO on the WSE is not always a good solution, especially if the Polish trading floor does not offer the expected valuation and the possibility of raising capital in the domestic market.

Today’s LSE as a chance for cheaper money with a mature market valuation

It is worth noting that the current combined capitalisation of companies listed on the LSE is around GBP 3.7 trillion, which is many times higher than that of WSE-listed companies.

Unfortunately, the WSE cannot always meet the capital needs of its companies, or at least meets them to a far lesser extent than the LSE.

Other benefits of an IPO or a dual listing on the LSE include:

  • Access to much larger pool of foreign capital and potential investors
  • Easier raising of capital through further issues
  • Much greater liquidity of shares than of those listed on the WSE due to the significantly higher turnover on the LSE, ensuring much higher valuations of LSE-listed shares
  • Raising a company profile in international markets and increasing brand recognition worldwide
  • Investor and market confidence – LSE-listed companies enjoy enhanced credibility among foreign business partners, investors, banks and financing institutions, which strengthens their negotiation position
  • Better possibilities of comparing the valuation of a Polish company to that of foreign peers listed on the LSE – not all sectors are popular or even present on the WSE, so investors often lack the knowledge or tools to properly value a given company

Dual listing with an M&A transaction in the background

A possible dual listing scenario involves the acquisition of a company listed on a foreign stock exchange by a company listed on a domestic stock exchange (e.g. the WSE). The acquisition takes the form of a merger of both companies. The owners of the merging companies may have an interest in maintaining a listing on both exchanges, which would increase their ability to raise capital.

In such a case, the execution of an M&A transaction (acquisition of one company by another) requires additional work in terms of preparing and executing the dual listing.

Landmark transaction on the Polish market

We authored and partnered the first ever dual listing of a Polish company – WorkService SA. And we are sure that subsequent dual listings have drawn to some extent on our experience.

We offer full legal support and unique know-how to companies interested in a debut on the LSE at every stage of the process, including identifying the most attractive stock exchange listing market, determining the optimal corporate structure for a company entering a foreign stock exchange, drawing up legal documentation, providing assistance in communicating with the stock exchange and the market regulator, as well as a number of other aspects on which the success of such a significant venture depends.

Any questions? Contact the author

Paweł Mardas

 

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