over 3 years ago • 2 mins
Ecommerce platform Allegro will jump straight in as Poland’s largest public company when shares start trading next month, it emerged on Tuesday – but an improving economic outlook could end up undermining 2020’s big tech valuations... 🛒
Allegro’s initial public offering (IPO) values the etailer at over $11 billion. High demand led to an increase in the number and price of shares on sale; as a result, the investment banks in charge may now offload yet more of the company’s hitherto private equity. The group of private investors which bought Allegro from African internet giant Naspers for $3.3 billion just four years ago will, however, retain control of at least three quarters of its stock.
Allegro’s lively pace of growth may be responsible for its attraction: the value of goods shipped by the platform rose 54% in the first half of 2020 compared to 2019. With only 8% of Polish retail sales currently conducted online – half the UK level, and a third that of China – there’s room for further expansion. The hope is that local loyalty will keep Allegro one step ahead of global rivals like Alibaba and Amazon, the latter of which still sells to Polish customers through its German site 🙄
With $2.3 billion worth of shares sold so far, the IPO is already Poland’s largest ever – and Allegro overtakes gaming whizz CD Projekt as the country’s largest public company despite the latter’s soaring share price in 2020. Poland, indeed, is becoming something of a hotspot for tech stocks: games developers Huuuge and People Can Fly also plan to list shares there this year. Local talent and changing consumer habits have supported the sector’s success – but some question how long the tech investment boom, at least, can last…
Allegro’s stock alone will represent over 6% of the value of Poland’s WIG20 stock index when it starts trading publicly on October 12th – with its size likely meriting eventual inclusion in Europe-wide indexes from providers MSCI and FTSE Russell. That could trigger an additional $300 million worth of demand for Allegro’s shares from “passive” investors in exchange-traded funds which buy shares of such indexes’ constituent companies, potentially benefiting earlier backers.
Technology IPOs – and tech stocks in general – have proved popular this year with return-hungry investors betting on further growth in a socially distanced, digitally connected world. By the same token, however, such companies’ share prices could – according to investment bank Société Générale – extend recent pullbacks once an effective coronavirus vaccine normalizes economic growth and tempts investors towards more “cyclical” stocks. Just when that day might come is, of course, anyone’s guess… 🤔
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