TALLINN - MicroLink, the leading IT company in the Baltics, announced recently it will ease trading restrictions on its shares. The move pushes the possibility of a secondary market for its shares closer, as the company pursues a possible initial public offering and listing of the stock.
According to Micro-Link's charter, shareholders had the right of first refusal regarding transfers of the company's shares to third parties, a restriction that will be lifted in about a month, as soon as the changes in the articles of registration are registered, said Peter Priisalm, MicroLink's corporate finance manager.
Allan Martinson, CEO of MicroLink, said in a statement that removing controls on share transfers will increase the liquidity and attractiveness of Micro-Link's shares.
After the completion last week of the company's largest private placing to date, boosting its market capitalization to more than 48 million euros ($43.4 million), together with last month's launching of an expanded employee stock option plan, MicroLink shareholders will soon number 100, amplifying the need for a more active secondary market for the company's shares, according to the company.
However, decisions on stock exchange strategies have yet to be made, according to Priisalm.
"An IPO accompanied by listing is certainly an attractive way for raisinal; however, MicroLink has been able to raise capital through private placements of shares to financial investors as well," he said.
Indeed, the latest 4.6 million euro ($4.2 million) private placing confirmed that the company's strategy, based on aggressive growth through mergers and acquisitions, has been a success, Martinson said.
"MicroLink's share price has tripled and market capitalization quadrupled since its first private placing 18 months ago," he added.
Priisalm assured that even if MicroLink decides to list its shares, it is unlikely to take place before the end of this year.
The mood surrounding MicroLink's action to lift trading restrictions was overwhelmingly positive.
Trigon Capital partner Aadu Oja said that although he did not expect the move to significantly affect the stock's current price level, it did shed light on the big picture.
"The mergers and acquisitions during the past year and a few others make MicroLink the absolute leader in the (IT) sector in the Baltics. Therefore, it is definitely the most interesting company that will be listed in the Baltics," said Oja.
Oja predicted that Micro-Link will list in the first half of 2001, pending favorable market conditions.
"It is in a very good position to become the most actively traded company in the Baltics," he said.
The past 12 months have seen especially robust growth for the company. In 1999, MicroLink purchased seven Web-related companies, which united to form Delfi, now the Baltics' leading Internet company. The most notable mergers were with Astrodata in 1998 and with the Latvian IT company Fortech in February this year.
By sales and employee figures, the company is now more heavily Latvian than Estonian. Of its 736 employees, 390 are in Latvia, 280 in Estonia, 60 in Lithuania and six in Russia. Micro-Link's Latvian subsidiaries make up approximately half of the consolidated sales of the group.
Priisalm stressed, however, that MicroLink is not going to "become Latvian," but is evolving into a genuine international effort, which comprises 20 companies operating in different areas of the IT sector across the Baltics and Russia. He said that MicroLink may consider expanding to other countries as well.
MicroLink's shareholders, 49 percent of whom are financial investors, also appointed two new members to its supervisory board last week: Edvins Karnitis, IT-guru for the Latvian minister of economics, and James Syme, manager of Societe Generale's Baltic Republics Fund.
MicroLink's turnover before auditing in the last fiscal year was 46 million euros ($41.5 million).