LJSE - Not So Desperately Seeking Suitors
The main market index, the SBI 20, gained 78.1%, the SBI TOP blue-chip index added 71%, while the PIX investment funds index was up 45%. The BIO bond index, meanwhile, lost 2.1%. The year was also notable for the massive increase in trading volumes and the capital growth of the market, which, at the end of December, stood at EUR 19.7 billion (investment funds excluded), having climbed by 71.5% during the year. This was mainly due to share price gains and the listing of the nation's second largest bank Nova Kreditna Banka Maribor (Nova KBM) on the official market. At the end of the year, the market capitalization of all the shares listed on the LJSE (investment funds excluded) amounted to 64.8% of Slovenia's 2006 GDP.
The turnover in 2007 amounted to EUR 2.23 billion, a 123.5% increase on the year before, with shares accounting for 87.7%, investment funds 7.5% and bonds 4.8%. The trend of trading volumes shifting from the semi-official to the official market also continued during the year; 86.7% of the total LJSE turnover was generated on the latter.
No change at the top
The volume of on-exchange trades in 2007 was a result of structural changes and the ongoing consolidation of ownership in the companies listed on the regulated market. Last year, four companies were delisted from the official market; however, this had little impact on its liquidity, as their trading volumes had already dropped significantly over the year due to the consolidation process. A further 13 small companies were delisted from the semi-official market, but these were mostly companies without the characteristics of listed companies and were rarely traded.
Prime market turnover in 2007 stood at 65.3% of the LJSE's total turnover. Retaining its status from 2006, the pharmaceutical firm Krka was the most coveted share of 2007, followed by Petrol (energy), Telekom Slovenije (telecommunications), Luka Koper (port operator) and Gorenje (appliances). After its listing in December, Nova KBM also joined the top-traders club. Of the SBI 20 constituents, the best performers in 2007 were the holding company Sava (up 160.6%), the airport operator Aerodrom Ljubljana (up 156%) and the energy/tourism conglomerate Istrabenz (up 132.8%).
Trading volumes on the TUVL, the secondary trading market for government bonds, fell significantly. This resulted from the listing of government bonds on another market, the foreign EuroMTS. Consequently, trading volumes on the TUVL amounted to a meagre EUR 401 m in 2007, barely 23% of the previous year's turnover. On the other hand, the LJSE semi-official market welcomed bonds of a foreign issuer for the first time.
LJSE attracts international interest
The LJSE itself was also the subject of a potential takeover, with the current stakeholders willing to sell a majority holding in their investment. This attracted representatives from several foreign stock exchanges, many of whom have already held preliminary discussions on the matter. Among them was an official from the operators of the Vienna Stock Exchange, who expressed his organization's interest in either a tie-up or a takeover. Wiener Boerse is just the latest exchange to express an interest in the LJSE after the Scandinavian group OMX opened the floodgates early in 2007 with a EUR 4.2 m takeover offer that was rejected as it was considered to be too low. Other suitors have included market operators from Poland, Greece, Italy and Germany, as well as the pan-European exchange Euronext. The Warsaw Stock Exchange (WSE) confirmed its interest in acquiring a 70% stake in Ljubljanska borza but does not want to be just a financial investor, but would rather establish an alliance between the two exchanges and connect both markets.
Seeking a strategic partnership
After one year of trying to sell a majority stake, the shareholders (mainly banks and brokerages) of the company managing the LJSE, Ljubljanska borza, formed a holding company with a 64.15% controlling share in the exchange and invited all bourses with head offices in the EU, Norway and Switzerland to submit non-binding bids for the firm. Invitations were also sent to distinguished financial institutions in these countries and the USA. The bids must be lodged with Arkas (the company heading the sale) by 8th February, but before that the candidates must gain approval from the Securities Market Agency.
Ljubljanska borza is looking for a strategic partner, who will keep the LJSE head office in Slovenia and actively cooperate in developing the Slovenian financial markets. It is expected that the partner will support rapid development of financial instruments, increase liquidity and list some international stocks on the LJSE. However, the deciding factors will be their strategic plan for the development of the LJSE, their pricing policy for services and the amount of the takeover offer, which current indications suggest should be in the vicinity of EUR 24 to 29 m.