Poland

International Investors Respond to Stable Economy and Privatization Opportunities

By Susan Burnell

With better economic stability than any other EU state last year, Poland is gaining a significant level of interest and investment from around the globe. Opportunities created by the Polish government’s Privatization Plan adopted in 2008 have generated over US$1.8 billion in the first quarter of 2010 alone.

According to the 2010 AT Kearney Foreign Direct Investment Confidence Index, Poland is the sixth-most-attractive country in terms of investments, a ranking that places it ten notches ahead of its 2007 ranking. Poland is now Central Europe’s largest country in terms of its GDP, which reached US$690 billion last year. Since 2000, Poland’s GDP-per-inhabitant has risen four-fold, from US$4,473 to US$17,989. The country’s GDP grew by 1.7% in 2009, the highest among all EU countries. A growth rate of between 2.5% and 3% is forecast by the World Bank for 2010.

Since its accession to the EU in 2004, Poland has made significant strides towards economic stability. Key elements include a well-controlled fiscal and monetary policy, avoidance of subprime loan involvement and low mortgage indebtedness.

Direct foreign investment activity shows that investors consider Poland a secure area for doing business. Ernst & Young’s “2008 European Attractiveness Survey” ranked Poland as the best place for investments or development projects—above Germany, Russia and France. With relatively low labor costs and highly qualified workers, Poland has attracted total investments of US$48.1 billion in the last three years.

The inflow of EU funds—US$96.6 billion by 2013—is expected to help Poland reduce the impact of the global economic crisis on its own economy. Infrastructure and education will receive the bulk of EU funding. The country will get another economic boost when it co-hosts, with Ukraine, the UEFA 2012 European Football Championship.

Privatization Opportunities in Energy, Chemical, Financial and Other Sectors

Proposals for privatizing more than 800 companies are a part of Poland’s Privatization Plan 2008–2011, estimated to generate approximately US$13 billion by 2011. The scope of transactions and anticipated revenues of over US$9 billion for 2010 make this the Plan’s most significant year to date. Currently, approximately 600 companies in which the Treasury owns shares are intended for privatization.

IPO opportunities in 2010 include PZU, the largest insurer in Poland and Central and Eastern Europe; and Tauron, the country’s second-largest producer of electric energy. Also coming up is the sale of the Warsaw Stock Exchange, the leading stock exchange in Central and Eastern Europe.

In the last two years, energy company Enea, the coal mine LW Bogdanka, and PGE—one of the largest energy groups in Central and Eastern Europe—were successfully listed on the Warsaw Stock Exchange.

In addition to energy, chemical and financial sector companies, privatization opportunities exist in manufacturing, technology, metallurgy, publishing, food processing and pharmaceutical companies. Resort properties, real estate firms, trading companies, service units and minority shareholdings are included as well.

To facilitate the ownership transformation process, The Ministry of Treasury offers a wide range of privatization options. It has created an English-language Web site for potential investors, which provides access to a database of company profiles, strategic business plans, privatization schedules and procedures. An Investor Relations Centre complements the investor-friendly services of the Ministry.