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Basic info

A new market financing the growth of young companies with a large growth potential, organised and operated by the Warsaw Stock Exchange, has started in late August 2007.

NewConnect - A New Quality on the WSE

NewConnect has the status of an organised market; it is operated by the WSE outside the regulated market as an alternative trading system. It is an offer for young, growing companies, especially in the high-tech sector (but companies from other sectors may naturally be eligible for trading).

NewConnect was developed for young dynamic Polish companies which need equity to tap the potential of innovation, this getting a chance to grow and to become one of Poland's large companies. Because of this issuer profile, NewConnect offers more liberal formal obligations and information requirements, which reduces the cost of capital. NewConnect was conceived as the first step on the exchange market for listed companies.

 
 

NewConnect is a market for companies:

  • with a large growth potential,
  • looking for equity between several hundred thousand and several million PLN,
  • operating in innovative sectors, mainly with intangible assets
    (e.g., IT, electronic media, telecommunication, biotechnology, environmental protection, alternative energy, modern services),
  • with a vision and a likelihood of an IPO in the exchange market
    in near future.

NewConnect offers

  • a modern market financing dynamic companies,
  • reduced formal requirements (admission and information requirements),
  • low cost of entry and trading,
  • excellent access to investors,
  • prestige and reputation of the market operator,
  • promotion and recognition of the company name.

Who Invests in NewConnect Companies?

 

NewConnect addresses the needs of (institutional and individual) investors interested in higher-risk investments offering above-average profits. The needs of innovative companies with a short track record and the needs of investors interested in the segment have so far remained unfulfilled due to the lack of a safe trading platform. NewConnect solves this problem. Investors interested in promising companied listed on NewConnect include among others:

  • individual investors with a bigger risk appetite looking for
    above-average return on investments,
  • hedging funds,
  • closed-end funds,
  • asset management companies,
  • private equity and venture capital funds.

Investment Risk

 

Investors in NewConnect should realise that the higher potential of growth of listed companies carries a higher investment risk.
This specificity of the market is a consequence of its profile: it lists companies with a short track record, operating in the most volatile
and competitive sector: the high-tech industry.

 

Two Entry Procedures

 

NewConnect offers the advantage, new to the Polish capital market,of private placements for up to 149 institutional and individual investors. In this case, irrespective of the size of the issue, the admission to trading is based on a short and simple information document prepared and approved by an Authorised Advisor. The preparatory phase from the decision to the start of trading may be as short as 2-3 months, much less than in the regulated market. A public offering is another procedure for the admission of shares to trading. The issuer has to comply with the same admission procedure as that binding in the regulated market with the obligatory issue prospectus approved by the Financial Supervision Commission (KNF). In the case of offerings up to EUR 2.5 million, the admission may be based on an information memorandum subject to KNF's scrutiny. The procedure from the decision to the IPO is the same as in the regulated market: 6-9 months.

 

Mandatory Partners

 

Authorised Advisor

 

The capacity and the readiness of an issuer planning the introduction of shares to NewConnect in a private placement are assessed by an independent Authorised Advisor under a co-operation agreement executed with the company. The Authorised Advisor gives assurance for the company entering NewConnect; it also supports the company in preparing the entry and co-operates with the company for at least 1 year of trading in NewConnect. Recognised, reliable investment companies, legal firms, auditors, and financial advisors may act as Authorised Advisors. The company appoints an Authorised Advisor
of its choice.

 

The Role of the Authorised Advisor

  • in preparation for the entry:
  • prepares the issuer for the entry to NewConnect, including the preparation and approval of the relevant admission document;
  • in the period of trading (at least for 3 years):
  • advises the company on its trading in NewConnect;
  • supports the issuer in complying with the information requirements.


Market Maker

 

In the period of trading, at least for 2 years, the company is supported by an investment company acting as Market Maker who mainly ensures the liquidity of trading in the company's shares.  

The NewConnect Trading Mechanism

 

The NewConnect trading platform is the UTP (Universal Trading Platform) represents world-class quality in technology which will rank the Warsaw Stock Exchange among the most advanced global stock exchanges. All shares are traded in a continuous system with a double fixing (at session opening and closing). Companies may choose between two systems: a system based on orders and a system based on prices. Sessions is open at 9.00 a.m. and close at 5.05 p.m. in the system based on orders, and open at 9.30 a.m. and close at 4.10 p.m. in the system based on prices. The types and the priority of orders are the same as in the regulated market.

 
Information Requirements
 

The information requirements for companies listed on NewConnect are significantly reduced. Compared to the regulated market, NewConnect offers:

  • option of non-audited semi-annual reports including only selected information,
  • free choice of accounting standards (any internationally recognised standards or standards applicable at the company's seat).

The information requirements still include:

  • current reports (but with a narrower scope),
  • quarterly reports
  • audited annual reports,
  • compliance with the corporate governance rules but taking account of the specificity of listed companies.

For more information and explanation on NewConnect trading in Warsaw please contact WSE officers:

•  Beata Kacprzyk, Business Network Development Department, phone direct + 48 22 537 76 10
•  Maciej Wojdyła, Business Network Development Department, phone direct + 48 22 537 71 93  

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