TALLINN - The Eesti Ehitus (Estonian Construction) group on May 2 announced an initial public offering, specifying that nearly 3 million shares would be listed on the Tallinn Stock Exchange. Analysts welcomed the offering, as it will help revive a struggling exchange after Hansapank's withdrawal last year. The stock offering is scheduled to last from May 2 's 11. The price of the shares will be announced on May 12, and trading in the shares is planned to start on May 18.
The offer involves 2,950,324 shares, of which 1,499,536 existing shares will be sold by the parent company EE Grupp and 1,450,788 will be new shares issued by Estonian Construction.
At present, the 13,927,576 existing shares of Eesti Ehitus are divided between 16 shareholders, with EE Grupp owning 86.16 percent. Majority shares in that company belong to entrepreneur Toomas Luman.
Sander Danil, analyst with Hansapank, said the planned listing of Estonian Construction was a positive step. The company is three times smaller by market cap than Merko, which is also a public firm, and is still a large company by Estonian terms.
Based on the median price offered, Estonian Construction would boast a market capitalization of approximately 1.4 billion kroons (90 million euros), compared with Merko's 4.8 billion kroon market value based on the price of its stock.
Danil described the offer as "reasonable in every way." The ratios used to determine the share value are comparable with those of Merko Ehitus.
The chief of equity markets at SEB Eesti Uhispank, Peeter Koppel, also said the addition of one more company to the list was a positive development. As he explained, the stock exchange has seen somewhat of a poor season since the departure Hansapank. Also, investors' attention has shifted even closer to emerging markets such as Russia and South America.
Koppel said that, while it was clear that Estonian Construction's share would be compared with that of Merko Ehitus, the companies were different in many respects. Merko Ehitus is more of a project manager, and it has apparently won the most from the housing construction boom, while Estonian Construction has dealt a lot with civil engineering projects.
The Estonian Construction group reported a consolidated profit of roughly 87 million kroons (5.6 million euros) for 2005, up 57 percent from 2004.
