VZCZCXRO7097
RR RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHWR #1743 2221203
ZNR UUUUU ZZH
R 101203Z AUG 07
FM AMEMBASSY WARSAW
TO RUEHC/SECSTATE WASHDC 4951
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHKW/AMCONSUL KRAKOW 1781
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS WARSAW 001743 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR EUR/NCE, EUR/ERA, EEB 
EUR/NCE FOR BPUTNEY 
COMMERCE FOR 4232/ITA/MAC/EUR/JBURGESS, JKIMBALL, MRODGERS 
TREASURY FOR MGAERTNER 
 
E.O. 12958: N/A 
TAGS: ECON EINV ETRD PL
 
SUBJECT: WARSAW STOCK EXCHANGE CREATES NEW SMALLER EXCHANGE 
 
REF:  WARSAW 1723 
 
¶1.  Summary.  The Warsaw Stock Exchange's (WSE's) new trading 
platform NewConnect will be launched on August 30, 2007.  NewConnect 
will be dedicated to Small and Medium Enterprises (SMEs) with high 
growth potential.  The new exchange has less restrictive listing and 
capitalization requirements.  The WSE hopes that companies initially 
listed on NewConnect will grow and eventually move up to the WSE. 
End Summary. 
 
--------------------------- 
NewConnect Debuts August 30 
--------------------------- 
 
¶2.  The WSE will launch a new trading platform, NewConnect, parallel 
to its main trading floor on August 30, 2007.  The new market 
platform is geared towards and will finance the development of young 
and dynamic companies, mostly SMEs, with high growth prospects. 
Potentially, NewConnect will provide investors with a high return on 
investment for their willingness to accept the higher risk level 
associated with such SMEs.  WSE representatives expect that venture 
capital and private equity funds, asset management funds and wealthy 
and high risk accepting individuals will invest in this alternative 
trading market. 
 
------------------------- 
Easier Entry Requirements 
------------------------- 
 
¶3.  According to WSE President Sobolewski, a group of Authorized 
Advisors will prepare the issue for an IPO on NewConnect and will 
act in a supporting and advisory capacity to the new firm for at 
least the first year of the listing.  The listing process on 
NewConnect will take place via a private offering.  The procedure 
will be shorter, easier and cheaper than a regular IPO on the WSE. 
The trading session on the new market will be shorter than the 
regular WSE session due to potentially smaller liquidity as well as 
much higher market risk.  The trading day will start at 930 AM and 
end at 200 PM.  The main stock exchange will provide regulatory over 
sight to its new offspring. 
 
------------------------------------------- 
Goal to Grow Companies so they can Join WSE 
------------------------------------------- 
 
¶4.  NewConnect is designed to host firms valued at around 20 million 
zloty ($7.4 million) with a value of their public offering between a 
few hundred thousand and few million zloty.  The plan is that the 
most successful companies will eventually move to the main floor. 
By the end of the year, WSE President Sobolewski expects more than a 
dozen listings on NewConnect and a few hundred in a couple of years. 
 In the long term, he hopes that small companies debuting on the WSE 
will provide more capital to the exchange.  At the end of 2006, 
WSE's capitalization to GDP ration was 46%, much lower than that of 
any major stock exchange in western countries.  Sobolewski believes 
that "WSE has a long way to go if it wants to catch up" with its 
western counterparts where the capitalization ratio often exceeds 
100% --  thus the stock market's capitalization is higher than the 
country's GDP. 
 
¶5.  Digital Avenue and S4E (storage4Enterprise), two hi-tech 
companies owned by the MCI Management investment fund, will be the 
first firms to debut on NewConnect.  WSE representatives expect that 
the majority of firms that will be represented on New Connect will 
be from the technology sector, but WSE also sees room for companies 
operating in other sectors of the economy. 
 
¶6.  Comment:  NewConnect, which in some ways follows the example of 
the London AIM, should fill a hole in Poland's capital markets by 
providing an easier way to list new companies.  Despite the WSE's 
insatiable appetite for new listings, some Polish companies are just 
not large and rich enough to meet the Exchange's requirements.  The 
Advisors, if appropriately chosen, should also be instrumental in 
ensuring that the new listed companies reach their growth potential. 
 The new platform is an innovative idea of the WSE to attract the 
wave of capital looking for interesting investment vehicles in 
Poland's buoyant economy. 
Hillas