The increase of the Bulgarian government's share in the country's only stock exchange will lead to the sale of its majority stake to an industry investor, the bourse's executive director has admitted, confirming recent speculations.
Bulgaria raised the state's stake in the Balkan country's stock exchange as it prepares to sell its majority to an industry investor and offer the rest to the public, said Ivan Takev, the bourse's executive director, said in an interview for Bloomberg agency.
Reports earlier in the week have suggested that the increase in Bulgaria's government share in the stock exchange is a step for its reprivatization, probably selling the stake to an international exchange group.
Since 2008, the stock exchange has traded on the Deutsche Boerse's Xetra platform under a contract that expires in 2012. Bulgaria has discussed ways to sell its bourse stake over the past decade with Sweden's OMX AG and exchanges in Austria, Greece and Poland to boost interest in local stocks and make trading more transparent.
"A technology provider doesn't necessarily have to be the strategic investor, but it is a certain advantage," Takev said. "We are working to boost liquidity, which was slashed in the past three years, to restore market growth and investor confidence. I hope in some three to four years we'll achieve this."
The exchange will become a public company after the Financial Supervision Commission approves its prospectus by the end of the year, Takev said. The bourse will sell the remaining 50% held by private investors including brokerages and banks.
Bulgaria's Finance Ministry raised on Monday its share to 50 percent plus one share from 44% in the country's stock exchange, which has been turned into a public company. The government bought 715,000 shares at BN 1 apiece.
A proposal to this effect was adopted at an Extraordinary General Meeting of the Bulgarian Stock Exchange on September 13.
It is expected that the listing of the Bulgarian exchange on its own platform will be a fact by the end of 2010.
Representatives of the Finance Ministry and the Stock Exchange have commented that the move will give the ministry the opportunity to seek a strategic investor, make the Exchange transparent, increase interest towards the capital market and reinstate the trust in the latter.
Meanwhile Victor Papazov, founder, former CEO and chairman of the Bulgarian Stock Exchange has harshly criticized the decision, saying the Bulgarian government is threatening the country's economic future by effectively nationalizing its stock exchange at a knock-down price.