Polish auction site to top the stock market

The Polish auction site Allegro has announced an imminent IPO to raise PLN 1 bn (EUR 225,000) of new capital, which will likely catapult to near the top of the exchange in terms of market capital.

Poland’s largest internet company, Allegro, which runs the auction site Allegro.pl and price comparison service Ceneo.pl, is raising money through the IPO. The funds are being raised in order to pay back debt and “support the Group’s growth plans by increasing its public profile and brand awareness”, according to a statement on Monday. The IPO will take place in October, according to the Polish Press Agency (PAP).

The total value of shares available in the offering, including sales of some of the shares of current investors is estimated by analysts to be around EUR 2-3 bn. Some five percent of the shares will be made available to individual investors. Estimates of the value of the company at PLN 42-45 bn (EUR 9-10 bn would make it one of the top companies on the Warsaw Stock Exchange, where first-placed CD Projekt has a market cap of PLN 45 bn (EUR 10 bn). The company made just shy of PLN 400 mln (EUR 90 mln) profits last year on sales of PLN 2.8 bn (EUR 630 mln)

Allegro has managed to buck lockdown trends by growing its business this year, as consumers chose internet shopping over venturing out to the shops. In the first six months of the year Allegro’s net revenue grew by over 50 percent, with a subscriber base of 12.3 million active buyers in June and 117,000 merchants. Its gross merchandise value rose over 50 percent to PLN 28.4 bln for the 12 months to June.

The company’s growth plans include B2B ventures, co-operation with international inbound sellers, development of other related markets and expanding into areas such as logistics. The Group also has the ambition to grow outside of Poland in the medium-term.

Founded in 1999 by Surf Stop Shop sp. z o.o., based in Poznań Western Poland, the company was purchased by the South African Naspers group for GBP 950 mln (EUR 1 bn), who then sold it to three venture capital firms; Cinven, Permira and Mid Europa Partners for USD 3.5 bn (EUR 2.95 bn) in 2016.

Shadows of competition

Allegro has had a privileged position on the Polish market. An attempted major launch of a Polish e-bay site in 2005 fell flat. Meanwhile, although Amazon has a major logistics base in Poland serving its German operations, the American behemoth has not started direct sales in Poland. Polish customers can, however, access a Polish-language version of Amazon.de. Amazon announced at the end of last year that it would start marketing in Poland directly this year.

On the other hand, purchases on Chinese-owned Alibaba are increasingly popular in Poland. Local players complain that Chinese sites are avoiding VAT by offering to send goods as “gifts” through the overloaded Polish postal system, which is handling around a million packages a month from Asia, overwhelmingly from auction sites.