Ceska Pozice

AVG steps back from Warsaw IPO

Czech software security company AVG will change tack and raise funds through a bond issue instead of a planned Warsaw flotation

Dariusz Prończuk, managing director at Enterprise Investors foto: EIČeská pozice

Dariusz Prończuk, managing director at Enterprise Investors

Czech security software giant AVG has dropped plans of an initial public offering (IPO) on the Warsaw Stock Exchange (WSE), instead opting to raise funds with a bond issue of up to $300 million, Reuters reported Wednesday. The announcement came through AVG’s chief shareholder, Poland-based private-equity fund Enterprise Investors (EI), which holds 34 percent of the software firm.

“At this moment, when it comes to the bourse, we decided that it is worth waiting and instead gain funds from the debt market,” Dariusz Prończuk, managing director at Enterprise Investors, told Reuters.

‘AVG is hardly alone among Central and Eastern European companies in cancelling planned Warsaw IPOs.’

The initial flotation was due to raise around €800 million ($1.1 billion) but, according to sources close to the discussions, was abandoned due to disagreements among shareholders opting for a bond sale followed by a larger dividend payout.

Prończuk said that the bond sale would likely take place in the US market in February or March and already possessed the necessary ratings from Moody’s and Standard & Poor’s. Prończuk further stated that a future IPO remains a possibility.

AVG is hardly alone among Central and Eastern European (CEE) companies in cancelling planned Warsaw IPOs. At the end of 2010, three high-profile IPO cancellations on the WSE took place, with Ukrainian gas producer Geo Alliance Oil Gas, Lithuanian Aviation Company Avia Solutions and regional real estate developer AFI Europe all backing out of flotations in response to market uncertainties.

CEE pharmaceutical consolidation

In other news for EI, the company announced that its Polish Enterprise Fund VI will sell its full stake in privately-owned Swiss pharmaceutical company PharmaSwiss for €52.5 million to Valeant Pharmaceuticals International. Including stakes of the other shareholders, the overall transaction is valued at around €350 million.

EI first invested in PharmaSwiss in May 2008 and continued to put capital into the company as it expanded its portfolio of products throughout CEE, including the Czech Republic, Poland, Hungary and Serbia, as well as Greece and Israel, to reach an annual turnover of €180 million in 2010.

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