Port investors make €4 million on IPO

The opening event was grand. Prime Minister Jüri Ratas attended, while Minister of Economic Affairs and Infrastructure Kadri Simson was meeting with her Lithuanian colleague Rokas Masiulis in Klaipeda instead.

Other guests included the IPO’s financial advisers, port and exchange employees, financial experts, representatives of the press.

The morning was hosted by seafarer and singer Marko Matvere who talked about the history of maritime trade and the stock market.

Port of Tallinn’s debut was a special event. It was the second partial privatization of a state-owned company in the history of the Estonian exchange – the first saw Eesti Telekom listed in February of 1999.

It was the third largest sale of shares in our exchange’s 22-year history after Eesti Telekom and Tallink. Thirdly, it was the second biggest IPO in terms of number of small investors. People who attended the event were in high spirits for those reasons and in hopes the move could revitalize the exchange.

Trading started vigorously. The first minute of trading saw 184 transactions and 355,500 shares change hands. The share price jumped to 2.05 euros, up 20.6 percent on the subscription price.

Investors’ enthusiasm cooled as the day progressed, and the share price started coming down. Activity of transactions slowed and there were minutes during which not a single transaction took place. The final number of transactions by the day’s end came to around 1,500. Share turnover came to €6 million.

By the end of the first day of trading, share price had grown by 13.4 percent or 22.8 cents to €1.928, making for the fourth most successful first day in the past 20 years. The share of Eesti Telekom gained 35.5 percent on the first day, Starman gained 18.7 percent in June of 2005, and Tallinna Vesi jumped 14.6 percent the week before.

The IPO was also criticized once the results were in. The biggest criticism was that the IPO preferred institutional investors. Those who subscribed to up to 3,000 shares had reason to be satisfied as they got about as much as they wanted.

Non-professional investors who wanted more than 3,000 shares only got 45 shares per every additional thousand subscribed to, meaning they had to subscribe to hundreds of thousands or even millions of euros worth of shares.

For example – Port of Tallinn’s leading private investors were Andrus Rand with 96,508 shares and Oleg Ossinovski who had 76,890 shares as of yesterday.

The second reason for criticism was the cost of the IPO that exceeded €7 million. Head of PR Foods Indrek Kasela referred to the IPO on social media as one of the most expensive in history.

“More than seven million given to investment bankers and lawyers is not adequate for a transaction of this size. Every Estonian paid around five euros for the process,” Kasela wrote on Facebook.

“Share distribution showed that money stayed in the family – the IPO preferred foreign funds as they stood closest to the bankers. More should have been given to retail investors in the interests of liquidity,” he said.

Partner at Superia Corporate Finance, that helped counsel the IPO, Henrik Igasta disagreed and described the cost as adequate.