Jānis Ošlejs, General Director of Primeks
Latvia’s capital market is too small, so we all have to grow it bigger together, therefore I am very happy about the issue of APF Holdings shares, says Jānis Ošlejs, Primekss General Director. We continue to publish his reflections.
I am also very pleased that the Rural Support Service decided to award a 2 million grant right now APF Holdings. Such a grant significantly reduces all risks and improves future financial indicators.
The risk of going public with an IPO is that the share price will fall after the IPO. It would make it difficult APF Holdings and also the future share issue of other companies, as investors would not want to take the risk of buying shares in an IPO. If the company wants to continue using the capital markets in the future, the goal should be to increase the IPO price. To achieve this, the IPO price should be as low as possible and the IPO should involve as many and larger investors as possible.
APF Holdings just cut its IPO share price to €5.11 per share, undercutting its actual company valuation by 25%, while announcing that Citadel the pension fund bought a significant part of the shares, and that the Rural Support Service will award a 2 million LAD support grant. Together, these three developments have significantly improved the prospects for future stock price improvement.
I am glad that simultaneously with the extension of the deadline and the new share price, the announcement has been made that for of APF Holding wants to become a significant investor Citadels group pension fund. This is very encouraging news. If a large Latvian pension fund invests, then they have confidence in the value of the investment and the development story of the company. Pension funds rarely invest in Latvia. Pension funds are interested in the good management of their investment after the conclusion of the IPO – that is, it will follow how the IPO promises are fulfilled and how the company is doing with the implementation of plans. In a sense, such a pension fund does an important job for all investors – it provides professional supervision from which other shareholders also benefit.
I am glad that the decision has been made to lower the IPO share price. Perhaps the owners and management of the company decided that they would try to achieve a post-IPO price increase. This is positive for the entire stock market and its future development.
And it is very good that the state also supports producers and exporters – a grant of 2 million means that APF Holdings financing requires less funds from investors and the return on invested funds is higher, and taking into account the growth plans, if they are fulfilled – and of course this question is in almost all IPO transactions – then the new share price of 5.11 euros will give investors a better return than the old price of 6.81 euros .
It is very positive that a real, successful, exporting, highly automated company producing in Latvia is using capital markets. It is very good that this is happening in the egg production business, especially considering that proteins are becoming an increasingly popular part of the diet, and we can be sure that people will eat eggs and there will be a demand for them both in Latvia and in Europe.
I think this is a good start.
2023-11-02 09:11:53
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