The Prague Stock Exchange is not dead. On the contrary, it has great potential for growth and development. This is pointed out by the financial group Starteepo, which has set itself the goal of awakening the public issue of shares (IPO) in the Czech Republic and stimulating the domestic capital market. It has the prerequisites for this, it brought seven new companies to the Prague Stock Exchange in five years, helping them to obtain more than one billion crowns from investors.
“We are living proof that capital, prestige and credibility of a listed company can be gained on our ‘small pond’,” says Starteepo founder František Bostl for SZ Byznys. His group, which is an important IPO consultant in the Czech Republic, is now coming up with another ambitious step.
It compiled the so-called IPO index, i.e. a list of 300 Czech companies that could one day seek to enter the Prague Stock Exchange, either on its main markets Prime and Standard, or on the market for small and medium-sized enterprises Start. The combined market capitalization of these companies is more than 423 billion crowns.
The Starteepo group calculated that the number of freely traded shares of Czech companies, or the so-called free float, could comfortably double on the main Prime and Standard markets if the first thirty companies were to carry out an IPO.
The Start market could then swell up to sixteen times in terms of market capitalization, from the current 13 billion crowns to roughly 208 billion crowns. The free float would also increase, from the current 2.6 billion crowns to almost 41 billion crowns. At the same time, the youngest market of the Prague Stock Exchange could potentially be enriched by 270 new companies.
“During the last six years, we carefully monitored more than 15,000 Czech companies and selected 300 of them that could potentially enter the domestic stock exchange. We emphasized long-term profitability, growth, transparency, but also, for example, the asset structure and reputation. For the purposes of determining valuation indicators, a group of global companies with a similar focus that are traded on world stock exchanges was determined for each sector,” Bostl outlines the valuation methodology.
“We are in contact with most issuers. And 41 of them (14 percent) have already expressed interest in a future IPO on the Prague Stock Exchange,” describes the companies’ interest in entering the domestic stock exchange.
Other companies that help or advise companies when entering the domestic stock exchange
- Wood & Company
- Patria Finance
- BH Securities
- Commercial Bank
- Czech Savings Bank
The largest number of promising companies are concentrated in Prague and the Central Bohemia region, which represent a third of the total number with a possible aggregate market capitalization of 182 billion crowns. The second most important region is the south and southeast of the republic, where the Vysočina, South Moravian and Zlín regions offer another 98 companies with a market capitalization of 132 billion crowns.
The creation of the list of stock exchange candidates from the Starteepo workshop is acknowledged by the Prague Stock Exchange itself.
“Until now, nothing that comprehensively maps the issuing potential of the Czech capital market has been created. It is also very interesting to see the regional distribution. It thus provides a completely plastic image of interesting and promising Czech companies. If these companies continued to grow and use the domestic capital market for their growth, it would have a huge effect not only for the companies themselves, but for the entire economy,” its spokesperson Jiří Kovařík tells SZ Byznys.
According to the director of the Prague Stock Exchange, Peter Koblice, the list of companies shows the potential that is available in the Czech Republic, provided that all those who make up the capital market will work intensively to make use of this potential.
“Of course, even on the assumption that we manage to convince the owners of the companies in question that the capital market is the right place to accelerate their development and growth. We at the stock exchange try to do our best for this. I am deeply convinced that there is not a single reasonable reason for the companies in question to turn anywhere other than the domestic market if they choose the capital market,” Koblic says, adding that there is no upper limit for the stock exchange on the number of annual IPOs.
Watch Business Club
Today from 14:00 you can watch Martin Jašminski’s Business Club on SZ Byznys. The functioning of the Czech market will be discussed by:
- CEO of the Prague Stock Exchange Petr Koblic
- founder of Starteepo Francis Bostl
- investor Ondrej Tomek
“So it’s really about the cooperation and activity of the whole ecosystem. If it works as it should, we can look forward to new interesting issues on the Prague Stock Exchange,” he adds.
From the shortlist of 300 companies, according to Starteepo calculations, exactly 30 companies, the list of which is available to SZ Byznys, could aspire to an IPO on the main markets of the Prague Stock Exchange, as their valuation could be at least 2.5 billion crowns. The combined market capitalization of these companies could reach more than 230 billion crowns, while the market value of the main Prime and Standard markets is currently over 1.23 trillion crowns.
A number of companies selected by the Starteepo group also appear in the list of the most valuable domestic companies Česká elita, compiled by the editors of SZ Byznys. These include, for example, Seznam.cz, DEK Holding, Agrostroj Pelhřimov, Livesport, HP Tronic, Juta, Ptáček – wholesale, Alcadrain, Pro-doma, Solvent, Vafo, Icom Transport, Contipro, Madeta, Jablotron or Canis Safety and Fosfa.
Look at: The list The report compiled a ranking of the 100 most valuable Czech companies. By clicking on a row in the table or on the interactive graphic, it is possible to find out more details about the located company.
Within the IPO index, there are companies from 25 different sectors, with the dominant sector being Information Technology and Software, followed by the Engineering and Building Materials sectors. These sectors represent almost a third of the total market capitalization of the IPO index.
A developed, efficient and prosperous capital market is the essential essence of any country’s sustainable economic growth. It supports the growth of local companies and the growth of the population’s wealth. However, historical circumstances were not very kind to the Czech Republic, and the Czech capital market is thus far below its potential, according to Bostl. It may seem that we have almost no capital market.
“Then from all sides we hear an almost over-the-top song about the non-functioning Prague ‘stock market’ and its decline. I have met dozens of demagogues from the ranks of politicians, entrepreneurs, investors and analysts, for whom it is more convenient to believe these regressive opinions than to rely on data, or even to ever do something positive for the capital market. This is also why the IPO index was created, which clearly shows that several dozen larger and smaller companies may soon head to the Prague Stock Exchange,” Bostl concludes.