Prague stock exchange seeks new start with small company offers

Illustrative photo: Klára Stejskalová

Prague’s stock exchange has had something of a roller coaster existence after it reopened in 1993, a few years after the fall of communism in 1989. It's now looking to boost its fortunes by raising cash for small companies.

Illustrative photo: Klára Stejskalová
The exchange's main market features just a dozen big companies, the likes of power company ČEZ, Komerční Banka, and telecoms company 02. After a series of foreign buyouts and squeeze outs of minority shareholders, the number of such big players has dwindled over the decades.

And in spite of the promises of action and initiative, the flow of new companies being introduced and quoted on the Prague exchange has been mixed at best. That appears to be the reason why the exchange has taken a new tack recently with its so-called START initiative where owners of companies worth more than around one million euros could sell some, or all, of their shares on the market.

The incentive for doing so is a simplified prospectus and procedures compared with those usually involved and, according to the exchange, minimal costs compared with similar European markets. It also promised an easy path for the sale of further tranches of shares if required.

The target audience? The exchange says they should be experienced investors ready to take a stake or take over ownership of up and coming companies, ready to assume the risks involves, and have around half a million crowns to splash out.

Trading in the START shares is not continuous as on other markets but confined to a few days a year when shares from companies newly launching and those already launched can be traded.

So far, three companies have tried their hand at raising cash on the new START market with mixed results. The most successful was the producer of work and outdoor boots, Prabos. Newcomer it is not, having been around since 1860. But it was seeking cash to pay off past debts, buy new equipment for its Czech production and production line in eastern Ukraine. The outcome of putting up for sale around 5.0 percent of the company was fresh funds to the tune of 400 million crowns.

The second company to tap the new market is Fillamentum, which produces filaments for 3D printing in the town of Hulín, in the Zlín region. It put up a stake of around 22 percent and raised around 100 million crowns. The cash will be used to boost local production and also launch a new factory in the United States, one of its fastest growing markets.

But the trio also contained a cautionary tale as well. Producer of pilotless planes for mapping and security missions, Primoco UAV, had hoped to successfully sell a stake of around 15 percent in the company and raise around 200 million for further development and expansion. But the offers did not reach the minimum interest for the sale to proceed. Primoco will, reportedly, seek to raise the cash in other ways but has not ruled out another attempt to use the START market.