ArmInfo.The Board of Directors of the Warsaw Stock Exchange (GPW) approved the proposal of the Board of the Exchange to acquire a 65.03% interest in the Armenia Securities Exchange (AMX) at a meeting on Friday. This is reported by the website: bankier.pl.
Currently, the Central Bank of Armenia (the seller) owns 90.05% of the shares in the share capital of AMX. As a result of the transaction, GPW will acquire 967 ordinary shares of AMX, which will allow it to receive 65.03% in the total share capital of the acquired company. The cost of transaction will be AMD 826,297,550.00. Thus, the Warsaw Stock Exchange (GPW) will become the majority shareholder of the Armenia Securities Exchange (AMX)
As a result of the transaction, GPW will indirectly gain control over the Central Depository of Armenia (the central securities registry in Armenia), in the share capital of which AMX currently owns 100% of the shares.
The transaction will take place in two stages. The amount will be paid in two tranches. The first tranche in the amount of AMD 498,765,150.00 is payable upon signing the share purchase agreement, receiving approval from the Central Bank of Armenia for the purchase of shares and fulfilling other formal conditions required under this agreement. The second tranche in the amount of AMD 327,532,400.00 is payable after receiving the necessary corporate permits
ArmInfo considers it appropriate to note that this is the second attempt by the Central Bank of the Republic of Armenia to find an institutional investor for the Armenia Securities Exchange (AMX). During the first episode, the buyer was Nasdaq-OMX, which acquired AMX in 2008, and from that moment a new stage of the Exchange's work began but we should mention work, but not development. Problems appeared with the arrival of OMX in Armenia. There were more than 200 companies on the AMX listing. With the entry of the Exchange into the OMX, it was necessary to change its organizational and legal status. AMX was a self-regulatory organization of brokers, each broker had his own voice. And in order to transfer the exchange to OMX, at the request of the latter, AMX was turned into an open joint stock company (OJSC). And since OMX needed guarantees to operate in the Armenian market, the brokers transferred their shares to the Central Bank, and the Central Bank, in turn, transferred them to OMX.
The exchange adapted its internal rules and working methods to NASDAQ - OMX standards, EU directives, and in order to go through the listing procedure issuers had to comply with these parameters: be fully accountable, transparent, meet the requirements of corporate governance standards, etc. As a result, out of more than 200 companies, five remained on the Exchange - these are those that understood the importance of being on the Exchange in terms of perception by foreign partners-counterparties, and those that had foreign investors in their capital.
But the epopee of NASDAQ-OMX lasted less than 9 years. Until 2017, the exchange belonged to NASDAQ, which acquired it from the Central Bank of the Republic of Armenia through an investment program for the development of the stock market. However, in 2017, NASDAQ rejected this project because it was not promising. During this time (NASDAQ-OMX), not only did the stock market not work, there was nothing and no one to trade, but also, the once very active currency platform gradually ceased to function, and the turnover on government securities fell sharply. The interbank credit market also left the stock exchange. The depressive economic environment prevailing in the country was largely to blame. Zero activity, including investment, affected the state of the stock exchange. Back in the late 2000s, the software for the exchange was purchased from the Moscow Exchange (MOEX) with a grant from USAID. The activity of the Armenia Securities Exchange is currently extremely low due to the serious structural problems of the economy. The only real working platform on the Exchange is the government bond trading platform.
Now, the second episode of interest in the Armenia Securities Exchange (AMX )is shown by the Warsaw Stock Exchange - from September 2020 with the specific intention of becoming a majority shareholder. And it is noteworthy that at the same time, the funds for the modernization of the AMX software were provided by the Eurasian Development Bank (EDB), which at the beginning of 2021 allocated to the Armenia Securities Exchange a grant in the amount of about $260,000, through the Technical Assistance Fund, to finance the bulk of the costs for the modernization and implementation of technical means new trading system.
In September 2021, the advantages of the already operating modernized trading system for government bond auctions were presented, as well as the trading system of the secondary market, which at that time was at the final stage of testing and implementation, and already at the end of 2021 a full launch took place. In addition to providing trading in the secondary market, the system, in accordance with international standards, allows investors to directly access the trading platforms of the exchange through stock brokers, as well as trade online through web and mobile applications. Thanks to a partner in the face of the Eurasian Development Bank, the trading system becomes available to end investors, participation in exchange trading is simplified, and an attempt is made to influence the development of the capital market, creating an opportunity to increase the number of direct market participants. Proof of this is the fact that AMX has received the "Best Exchange in the South Caucasus" award from Global Banking & Finance Review for two consecutive years. The EDB's technical assistance policy will continue to contribute to the development of the Armenian stock market, and cooperation will not be limited to this program. Other development programs will be implemented with the support of the EDB in the near future.
Earlier, 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 share of the Central Bank of the Republic of Armenia in the capital of AMX at that time was 90.1%, and the exchange itself owned the remaining 9.9%. After the transaction, the Central Bank of Armenia will retain 25%, and 10% will be acquired by a third party appointed by GPW. The letter of intent signed between GPW and the CBA defines the framework conditions for further negotiations aimed at concluding a possible investment agreement. At the next stage, GPW planned to conduct a comprehensive study, develop a five-year program for the development of the Armenian exchange together with the Central Bank of the Republic of Armenia and AMX, and establish the final terms of the investment agreement, which may differ from the framework conditions. Back then, GPW identified a list of more than a dozen possible strategic projects aimed at the long-term development of the Armenian securities exchange. The main areas of development include the introduction of the latest solutions based on modern technologies, the organization of commodity trading, support for the re-listing of GPW and AMX issuers, and the provision of a modern trading platform. The digitalization and automation of processes, which are currently the mainstay of stock exchanges in advanced economies, are considered as priorities.
Armenia Securities Exchange (AMX) is the only stock exchange operating in Armenia, which is also the sole shareholder of the Central Depository of Armenia. The mission of the AMX group is to contribute to the creation of a favorable investment climate in Armenia by offering effective solutions and services, including securities trading, clearing, settlement and management of pension systems.