Friday, September 18 2020 19:40

ArmInfo. Warsaw Stock Exchange (WSE/GPW) intends to become the controlling shareholder of the Armenian Stock Exchange. As the press service of the Central Bank  of Armenia told ArmInfo,

On 18 September 2020, the Warsaw Stock  Exchange (GPW) Management Board and the Central Bank of Armenia (CBA)  signed a term sheet concerning negotiations to purchase 65% majority  interest in the Armenia Securities Exchange (AMX) by GPW. The  agreement is not binding. The final terms of the acquisition will  depend among others on results of due diligence and necessary  corporate approvals.

"The relations established between GPW and the Central Bank of  Armenia spell good news for both parties of the agreement. Many  sectors of Armenia's economy are looking for quality investments so  the country has a huge growth potential. Investments are a driver of  economic growth, especially in the emerging markets. In my opinion,  GPW's acquisition of AMX would put the Armenian capital market on  fast track to growth while the Warsaw Stock Exchange could make  satisfying returns on the investment. It is relevant, as well, that  Poland is promoting emerging markets. This is a good direction," said  Jacek Sasin, Poland's Deputy Prime Minister and Minister of State  Assets.

The term sheet signed by GPW and CBA defines the framework conditions  of further negotiations aiming at a potential investment agreement.  In the next step, GPW will carry out a due diligence, draft a  five-year development plan for the Armenia Securities Exchange in  partnership with CBA and AMX, and define the final terms of the  investment agreement, which may be different from the framework  conditions.

"GPW is a stable and steadily growing company at the heart of  Poland's capital market and the leader of the CEE stock exchange  industry. I am certain that the extensive experience and competences  gained by the Warsaw Stock Exchange in the last 30 years will ensure  a close and fruitful relationship with Armenia's financial market,"  said Dominik Kaczmarski, Head of Analysis and Reporting Department at  Poland's Ministry of State Assets, President of the Warsaw Stock  Exchange Supervisory Board.

As a part of its analyses preceding the execution of the term sheet,  GPW has defined a list of more than a dozen potential strategic  projects geared at long- term development of the Armenia Securities  Exchange. The key areas of development include the implementation of  innovative solutions based on state- of-the-art technology, the  organisation of trade in commodities, support for dual listing of GPW  and AMX issuers, and the provision of a modern trading platform.  "We  can see many areas where we could advance the development of  Armenia's capital market. The primary areas include digitisation and  process automation, which are now the key pillars of stock exchanges  in developed economies.  Potential acquisition of AMX would help us  expand our services and step up the implementation of the strategy  #GPW2022. On the other hand, it would open the GPW Group's know-how  to the Armenia Securities Exchange," pointed out Marek Dietl,  President of the GPW Management Board.

The AMX Group's consolidated revenue stood at PLN 6.4 million (USD  1.71 million), EBITDA at PLN 2.0 million (USD 0.53 million), and net  profit at PLN 1.3 million (USD 0.35 million) in 2019. The AMX Group's  total assets stood at PLN 6.5 million (USD 1.73 million) as at 31  December 2019. The preliminary non-binding estimated valuation of  100% of AMX equity is equal to the company's book value as at 30 June  2020, i.e., approx. PLN 6 million (USD 1.6 million). The potential  purchase price of interest in AMX to be paid by GPW will be confirmed  after the completion of the due diligence.

"We are glad to have reached an agreement on the base framework of  our future cooperation with WSE. This mutually beneficial deal is of  a long-term strategic importance to both sides and we are also glad  to state that we see WSE as the partner sharing our vision for future  development of capital markets. WSE leadership in this venture  provides an opportunity for bringing their experience and know-how  and transform AMX into a robust, innovative and convenient platform,  serving as gateway for investors to new markets.  This will also lead  to fulfilling our joint aspirations for regional expansion" - said  Martin Galstyan, the Governor of the Central Bank of Armenia.

The core business of the AMX Group is to organise trade in financial  instruments and to operate a clearing house and a settlement  institution for transactions in financial instruments in Armenia. The  company has its seat in the Armenian capital city Yerevan.  The  Central Bank of Armenia holds 90.1% of AMX. The remaining 9.9% are  AMX's treasury shares. After the deal, CBA will hold 25% of AMX and  the remaining 10% will be acquired by a third party to be named by  GPW.