Reuters: Poland may seek partner in real estate IPO - sources

(Reuters) - Poland may try to line up a real estate fund as an investor in property group PHN as part of attempts to ensure it fetches the planned Z1bn (US$315m) from an initial public offering planned for later this year, sources told Reuters.

The sale of PHN, or Polski Holding Nieruchomosci, is a centrepiece of Poland’s privatisation plans this year, pegged at Z10bn, although some analysts caution the shaky market could make the flotation difficult.

“The listing remains the main target for PHN, but participation of a real estate fund has been considered and the ministry is not excluding such a scenario as part of the IPO,” a person close to the matter said.

Poland’s treasury ministry, which oversees state assets, created PHN last year by pooling together 180 different real estate holdings with an estimated value of Z2.3bn.

“Valuations in the sector are low,” another source close to the process said. “It will be hard to convince individual investors to this investment. A fund, for instance a real estate one, could provide PHN with proper know-how.”

The treasury ministry, which oversees state assets and privatisation, declined to comment.

Analysts say PHN’s diverse holdings may be difficult to value especially with the markets only starting to recover from a rough 2011.

“It is going to be a hard IPO to do,” said Maciej Wewiorski, analyst at DM IDM SA. “Many companies are currently trading with a big discount to their net asset value, like GTC or Echo Investment. There might simply be a problem with getting a good price.”

Warsaw-listed real estate holdings GTC and Echo Investments shed 62% and 31% last year, respectively.

The Treasury will present its privatisation plan for 2012 and 2013 later this month. Recently appointed minister Mikolaj Budzanowski is not expected to give many details due to market uncertainty, although most large assets are expected to be sold via the Warsaw bourse.

Last year, when Warsaw’s main stock index shed 22%, Poland called off the sale of a further stake in the country’s largest lender PKO BP and failed to find buyers for refiner Lotos.
 

(Reporting by Agnieszka Barteczko and Adrian Krajewski