1. Business
October 1, 2020

Allegro market debut expected to break the record of IPO in Poland

By MarketLine

Allegro, Poland’s leading e-commerce platform, announced its plans to list on the Warsaw Stock Exchange (WSE), in a move that could easily become the country’s biggest-ever stock market debut.

Allegro set the price for its listing on the WSE at PLN43 ($11.2) a share. The company announced it would sell 213.5 million shares and raise PLN9.2bn ($2.4bn), valuing the group’s equity at PLN44bn ($11.5bn). Allegro also has an “overallotment option” to increase the offering by 15%, once the stock starts trading on October 12, which could lift the total proceeds to PLN9.3bn ($2.4bn).

The planned IPO can make Allegro the most valuable listed company in Poland. Currently, the Polish video game publisher CD Projekt, holds the number one position, valued at PLN47.3bn ($12.3bn). Allegro’s listing also tops the previous record of PLN8.1bn ($2.1bn) raised by an insurance company PZU in 2010.

Allegro has said that the IPO will help it pay off a part of its net debt, which at the end of June 2020, stood at 3.7 times the company’s adjusted EBITDA. The remainder of the IPO proceeds will go to Allegro’s private equity owners Cinven, Permira and Mid Europa Partners. They purchased the Allegro business from its previous owner, South Africa’s Naspers, in 2016 in a $3.3bn.

Advantage Allegro as Covid-19 turns investors’ eyes towards digital opportunities in Poland

Poland has been one of the EU’s fastest-growing economies over the past decade, but despite being a leader in digital payments, has a relatively small online retail market. This means, for companies like Allegro, there is plenty scope for further growth.

Founded in 1999, Allegro, has about 12.3 million “active buyers”. In 2019, it made a net profit of PLN399m ($103.9m), up 73% comparing to 2018. Its revenues were PLN2.4bn ($0.6bn) in 2019, an increase of 31% comparing to the previous year. The company is currently the biggest e-commerce market in Poland, and analysts expect it to remain so unless foreign giants like Amazon attempt to make a significant play for the Polish market.

The anticipated IPO is the latest sign of increased investor interest in digital companies during the lockdowns caused by the coronavirus pandemic. Allegro’s listing is expected to be followed this year by debuts from other retail and gaming companies, including the clothing group Answear.com, and the mobile games application provider Huuuge.

The IPO can provide a much needed boost to Warsaw’s stock exchange, which is dominated by state-owned groups and has struggled to attract new listings in recent years. Allegro’s listing is expected to help the Polish stock market cut its reliance on old-economy industries and raise the profile of technology stocks, which are scarce across Europe.