Warsaw Stock Exchange to buy 65 per cent of Armenian Securities Exchange

The Warsaw Stock Exchange (GPW) has signed a term sheet with the Central Bank of Armenia (CBA) concerning negotiations to take over a majority stake of 65 per cent in the Armenia Securities Exchange (AMX).

This term sheet is not yet legally binding, as the final terms of the acquisition will depend on the results of the due diligence process and necessary corporate approvals.

“The relations established between GPW and the Central Bank of Armenia spell good news for both parties of the agreement. Many sectors of Armenia’s economy are looking for quality investments so the country has a huge growth potential,” said Jacek Sasin, Poland’s deputy prime minister and minister of state assets. “It is relevant, as well, that Poland is promoting emerging markets. This is a good direction.”

After signing the term sheet that defines the framework for the negotiations, the next step for GPW is to perform its due diligence as well as draft a five-year development plan for the Armenian Securities Exchange.

“I am certain that the extensive experience and competences gained by the Warsaw Stock Exchange in the last 30 years will ensure a close and fruitful relationship with Armenia’s financial market,” said Dominik Kaczmarski, president of the Warsaw Stock Exchange supervisory board.

As part of its analysis preceding the term sheet, the GPW has already defined a list of more than a dozen potential strategic projects aimed at long-term development of the AMX. Key areas include the implementation of innovative solutions based on state-of-the-art technology, the organisation of trade in commodities, support for dual listing of GPW and AMX issuers, and the provision of a modern trading platform.

“We can see many areas where we could advance the development of Armenia’s capital market. The primary areas include digitisation and process automation, which are now the key pillars of stock exchanges in developed economies. Potential acquisition of AMX would help us expand our services and step up the implementation of the strategy #GPW2022. On the other hand, it would open the GPW Group’s know-how to the Armenia Securities Exchange,” pointed out Marek Dietl, president of the GPW management board.

The consolidated revenue of the AMX Group stands at 6.4 million złoty (approximately 1.4 million euro), its EBITDA 448,840 euros and net profit at 291,756 euros. A non-binding preliminary valuation of the Armenian Securities Exchange equity is equal to the company’s book value of 5.8 million złoty, around 1.3 million euros.

“We are glad to have reached an agreement on the base framework of our future cooperation with the Warsaw Stock Exchange. This mutually beneficial deal is of a long-term strategic importance to both sides and we are also glad to state that we see the GPW as the partner sharing our vision for future development of capital markets,” said Martin Galstyan, chairman of the CBA.

The Armenian Securities Exchange currently organises trade in financial instruments and operates a clearing house and settlement institution for the transactions in financial instruments in Armenia. It is headquartered in country’s capital, Yerevan. Right now, the Central Bank of Armenia owns 85 per cent of the AMX, with the remaindering being AMX’s treasury shares. Under the term sheet, the CBA will raise its stake to 90 per cent and subsequently sell 65 per cent of the AMX to the Warsaw Stock Exchange. Once the deal is done, CBA will own 25 per cent of the exchange, with the remaining 10 per cent going to a third party to be named by the Warsaw Stock Exchange.

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