BSE harbors hopes of new listings


There are a handful of Hungarian companies that have been considering a listing on the Budapest Stock Exchange for some time now, but have not taken the final decision either due to bad timing or the unfavorable business environment. Even the bravest will only go for a technical listing, and take a wait-and-see approach with a promise to raise new capital within a couple of years.                 

The Budapest Stock Exchange hopes to be able to fulfill its main duty, to help companies raise funds and to become the main alternative financing source to bank loans in the medium-term. Despite its best efforts, it is just not happening yet, with only one real IPO in 2010 and none in 2011. 

“Seeing three to five REIT IPOs in the next couple of years would be an extraordinarily good result,” said György Mohai, the CEO of the BSE at a small- and mid-cap conference organized by the bourse in cooperation with KBC Securities. Parliament gave a green light to real estate investment trusts, which operate as public companies, in mid-July, as reported earlier in the Budapest Business Journal. 

As regards to classic IPOs, the representatives of only two potential issuers, Ottó Gecser, CEO of brokerage Brokernet and Dávid Tibor, the owner of building material producer Masterplast, gave presentations at the conference. The event provided the possibility of informal meetings for issuers, companies preparing to be listed on the stock exchange and domestic investment fund managers. 

In 2001, there were three technical listings on the BSE: feed company Visonka, asset management firm Plotinus and healthcare firm Biomedical Computer Technologies.


Masterplast, which started in a garage in 1997, multiplied its sales revenues every year until 2008, Dávid said. He believes that the company could be an attractive story for investors, as the last couple of years proved that the business is crisis resistant. Masterplast managed to remain profitable during the crisis and the management was able to reorganize the company in response to the challenges of the economic downturn. “We did not have time to restructure the firm during the period of dynamic growth,” Dávid added, referring to one positive effect of the crisis. 

Having closed down five foreign units, Masterplast is currently present in 12 countries, with the top markets being Romania followed by Hungary, Serbia and Ukraine. The company has opened a representative office in China, “however, this has not manifested in revenues yet”. 

In 2011, the company’s sales revenues are expected to stagnate, although EBITDA and pre-tax profits will jump, Dávid said. As a result of streamlining the company’s operations, the remaining units and product groups have become much stronger, he noted. 

Masterplast has six product categories. Within that, Dávid sees the main growth story in thermal insulation systems, while roofing will be a debut product group in the new Russian unit following its successful launch in Ukraine. 

The company first decided to list its shares in 2006, but preparations were suspended during the crisis. In 2011, the company dusted off the project and Masterplast was converted into a public company (Nyrt) from a private one (Zrt) in April. “A board meeting in October will approve the final strategy, which will be published in November,” Dávid said.

“We wanted to float the company’s shares, even when practically unlimited bank financing was available to us,” Dávid said. “We could still get sufficient bank financing, if we wanted to, however, we would like to finance our new investments from the capital markets, too,” Dávid stressed. 


The company was founded by its four private investors in 1999 and started operations with 30 brokers; it now has 2,800-3,000. “The global crisis forced the owners to restructure a very successful family business,” Gecser said. As a result, the Brokernet group continued its operation as a holding from 2009. 

With the resulting cost-effective and transparent operations, the renewed and consolidated group was ready to undertake the steps towards regional expansion and a presence on the stock market, the company said. 

Gecser sees no room to expand in the market of the sale of unit-linked products, where the company has a 62-65% share. “We have to find new markets, either by selling new financial products, or by expanding in the region or even further,” he said. 

The company has been present in the Slovakian market for five years, and launched its Romanian unit in 2011. Building business from scratch, as in Romania, is just one of several options, including mergers, acquisition, swap constructions and long-term partnerships, noted Gecser. 

Brokernet will be ready for an IPO next year, Gecser said. “We are planning a classic IPO with both a partial exit and raising new capital.” An important advantage of being a listed company is that it provides a clear indication of the value of the business, he added.


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