Almost two decades after its funding the Polish e-commerce firm, Allegro, has gone public. On the 12th of October, the firm was listed on the Warsaw Stock Exchange, where its shares opened at 65 zł a piece, significantly above its initial IPO price of 43zł. This is a groundbreaking IPO in the history of the Warsaw Stock Exchange, which has struggled with acquiring new stimulus due to the dominance of state-controlled businesses, in light of the Polish government’s bid at “re-polonising” the economy. Currently, Allegro is Poland’s biggest listed company, now worth €20bn, which is more than twice as much as the second highest listed company, CD Projekt, the game maker behind the Witcher games franchise. Allegro is the main e-commerce platform for Polish consumers as well as the leading online marketplace in Poland.
It focuses on targeting the retail market in Poland and it is in the world’s top ten e-commerce websites. It mostly sells across electronics, sport and leisure, kids automotive, fashion, health and beauty, media and art. On average, it is visited by 20 million internet users a month and has recorded 32 million monthly transactions in the past year. Allegro was inspired by the successful emergence of the American e-commerce firm eBay and was founded in 1999 by another Polish company called Surf Stop Shop. It is currently owned by a trio of investment funds in South America, Cinven, Permira and Mid Europa Partners.
Allegro’s cosmic success was forecasted from the beginning when its predicted valuation of €12bn summed up to 13 times this year’s expected revenues, which was triple that of Amazon. The firm continued to break expectations when it increased the number of shares it was selling by 14% due to the confidence in the high valuation. All projections were vindicated by the end of the first trading day when Allegro’s capitalisation rose by 63%, with its current enterprise value at about 21.5 times expected sales for the next year. This has been credited to Poland’s growing middle class, the growing dependence on e-commerce during the pandemic as well as Allegro’s dominance over Polish market share. However, fears that Amazon could set its focus east to the Polish market have cast doubt on Allegro’s endurance.
It focuses on targeting the retail market in Poland and it is in the world’s top ten e-commerce websites. It mostly sells across electronics, sport and leisure, kids automotive, fashion, health and beauty, media and art. On average, it is visited by 20 million internet users a month and has recorded 32 million monthly transactions in the past year. Allegro was inspired by the successful emergence of the American e-commerce firm eBay and was founded in 1999 by another Polish company called Surf Stop Shop. It is currently owned by a trio of investment funds in South America, Cinven, Permira and Mid Europa Partners.
Allegro’s cosmic success was forecasted from the beginning when its predicted valuation of €12bn summed up to 13 times this year’s expected revenues, which was triple that of Amazon. The firm continued to break expectations when it increased the number of shares it was selling by 14% due to the confidence in the high valuation. All projections were vindicated by the end of the first trading day when Allegro’s capitalisation rose by 63%, with its current enterprise value at about 21.5 times expected sales for the next year. This has been credited to Poland’s growing middle class, the growing dependence on e-commerce during the pandemic as well as Allegro’s dominance over Polish market share. However, fears that Amazon could set its focus east to the Polish market have cast doubt on Allegro’s endurance.
Foreign investors’ confidence was shaken in the Warsaw Stock Exchange after its failed merger with the Vienna Stock Exchange in 2013, the overwhelming dominance of state-controlled companies in the utility sector as well as the government’s narrative of favoring Polish capital. Furthermore, the country’s blue chip WIG20 index has experienced very little growth over the past ten years, as compared to its peers, offering a mere 5.7% total return, However, on the other hand, before the COVID-19 pandemic, Poland had one of the fastest growing European economies, with almost 27 years of uninterrupted GDP growth.
Nonetheless, the stock exchange appeared to be rejuvenating with CD Projekt’s IPO and has seemingly cemented its credibility with Allegro’s debut, despite having lost more companies than gained over the past three years.
Natalia Szperna
Nonetheless, the stock exchange appeared to be rejuvenating with CD Projekt’s IPO and has seemingly cemented its credibility with Allegro’s debut, despite having lost more companies than gained over the past three years.
Natalia Szperna