BVB to increase capitalization fourfold in 3 years, to €100 bln

BVB’s current capitalization amounts to €26 bln, or 25 percent of Gross Domestic Product (GDP). This is the lowest in the region, since the value of companies listed on Poland’s stock exchange amounts to 88 percent, 60 percent in the Czech Republic, and 40 percent in Bulgaria. However, the market value of companies listed on BVB is higher than the capitalization of Bulgarian companies, worth €14.29 bln.

During this weekend’s Capital Market Forum, stock exchange administrators introduced a strategy to BVB shareholders (brokerage companies, banks and individuals) aimed at increasing BVB’s business value. Its main goal is to boost stock capitalization to €100 bln, by attracting as many equity issuers as possible. BVB is targeting state companies that could be privatized through the stock exchange and international companies which have developed successful business in Romania. BVB officials also plan to increase the value of Initial Public Offerings (IPO) in excess of €2 bln. However, this requires a reduction in the time frame between the end of the IPO and the start of share trading and lower listing costs.

Other goals of stock exchange administrators is to increase the average daily transaction value to €80-100 million by enlarging stock market operations, to raise the number of active investors, and reduce operational costs.

“I think our goal is feasible, because we are an emerging stock exchange, with potential for growth, albeit limited,” according to BVB’s General Manager, Stere Farmache.

Moreover, the stock exchange aims to play an active part internationally, by developing partnerships and joint projects with other stock exchange operators - cross-membership and cross-listing agreements. Cross-listings (a title listed on several stock markets) is usually used to obtain more liquidity and to offer investors more trading options. Through cross-membership, members of a stock market can trade shares on a partner stock market.