Added values

What is NewConnect? What companies may appear on this market?

NewConnect is an alternative market of the Warsaw Stock Exchange characterised by more lenient admittance criterion and lower informational requirements than on the regulated market. If partnerships that debut on NewConnect decide to sell their shares by means of private placement, they do not have to write the prospectus. Instead, an informational document approved by the Authorised Adviser of the NewConnect market will suffice. Any company that meets the so called admittance conditions may appear on NewConnect. These may be completely new companies as well as  companies with some business experience. We have here both manufacturing companies from the traditional branches of economy and very modern and innovative partnerships activities of which are related to above-average use of intellectual capital.

Why is it worth to procure funds through NewConnect? What is the difference between procuring funds on this market and taking out a credit or getting an EU subsidy?

Our market is, of course, an alternative to a credit or e.g. getting an EU subsidy. These sources can be a supplementation to getting the funds from the public market which is NewConnect. A great advantage of our market is a quick and simple procedure which specialised advising companies – the Authorised Advisers –  help with. The average time of acquiring funds by private placement (addressed to a maximum of 99 people) is 3 months. Another advantage of NewConnect is the low cost of capital, which depends on the size and type of the offer, but on average is equal to 5,45% (according to data for the first half-year of 2010).
NewConnect was created for companies with a big innovation potential. How many companies from the creative sectors had their debut on your market? And is it a lot, or not, compared to other markets?

This year only, up to the end of November, 72 partnerships had their debuts on NewConnect. There are numerous definitions of an innovative company. If one takes into consideration also companies specialising, next to their standard business, in innovative projects then their number is very high. There are many companies specialising in branches such as IT or biotechnology on NewConnect. We regard the second one as very prospective and have created a special index that classifies companies form this sector called Life Science.

Who is the market intended for? Can a pattern designer who has their own studio (a sole proprietorship) with a turnover of about 200,000 zł think about going on NewConnect. If not, then when can they start thinking about it (if at all).

There is no stiff minimum capitalisation or revenue from sales limit on this market. However, there are several clear and simple conditions which a company must fulfil. The first one is to have a legal frame – joint-stock company or limited partnership with shares – so a sole proprietorship would have to be changed into a required frame. If an entrepreneur identifies the business projects well and fulfils them in the form of an organized enterprise, then investors may become interested in this kind of business.

How much money does one need to get on the market? How much is one going to pay to all the Advisers who prepare their company for the debut?

As I mentioned before, there is no minimum capitalisation limit. Costs of the Authorised Advisers are quite diverse depending on the size of the offer and they include the general cost of conducting an offer which is depicted on the chart below:

 

One should also remember that up to 50% of the costs related to preparing the documents, analyses and expertises concerning acquisition of an external investor (most of this are costs of Authorised Advisers) may be acquired from an EU subsidy.

The preparation process to a debut may last from 1 to 3 months? What does it depend on?

It depends on several factors. When a partnership has the appropriate legal frame, it additionally depends on how quickly the information document is prepared. The time of just conducting an offer is related to the means of promotion and even the branch/sector in which the partnership works or how attractive it is to investors at that time.

Who in the company is the best person to lead the process of entering the market? Which people should be in a team working on the debut?

There is no principle. Usually, it is the board of directors, a person responsible for finances or a unit created specifically for this purpose. Most of the preparation is done by the Authorised Adviser of the future issuer. It is important for the partnership to know what the capital market is and what the partnership wants to achieve by entering the public market.

Does the organiser of the market support the newcomers? If so, in what way?

The stock market directs its offer to a very wide scope of entities, in Poland and abroad. We suggest NewConnect to enterprises from the sector of small and medium companies which want to increase their capital. The stock market mainly gives its issuers more credibility in the eyes of trading partners and investors. We support partnerships that we quote by promoting them on the public market. Such partnerships have a number of privileges such as free access to events that we organise. We also make our stock market infrastructure available to them where they can organise, for example, meetings with investors.

One has gained a capital on the market but what is next? What obligations must be taken into account when being quoted on NewConnect?

Entering the capital market gives a great privilege of using the title of a public partnership. This big pack of added values – in the form of increasing a company’s reliability and transparency – is also related to the obligation of conducting a proper information policy. The partnerships must remember about communicating with the market and the investors conscientiously and on time. They must obey the rules of corporate governance.

Let us assume that our company develops and wants to introduce a new product. Can we acquire the funds on NewConnect again?

Yes. The capital market’s trait is that its participants can develop using successive rounds of funding. To achieve this, the partnerships must be reliable in the eyes of other participants of the market and have trust of the investors who give companies their money to make profit.

For how long can a company be quoted on the market? What happens next?

NewConnect is a vehicle for funding enterprises which need a capital in order to develop. We want not only the already-existing partnerships to enter our market but also partnerships to be created already with the intent to debut on NewConnect. After that, NewConnect is supposed to be an incubator of entrepreneurship. NewConnect is addressed to small entities but we would like the small entities to grow, gain mass and eventually even enter the Warsaw Stock Exchange Main Market. Our idea was for NewConnect to be not just a waiting room before the Main Market. NewConnect has its own image, its own rules and its own offer for entrepreneurs, i.e. its own, individual and original “intelligence”. It is a market that is well adapted for those entrepreneurs who want to develop but at the same time wish to hold on to a certain low-profile activity. It is for this circle of companies and thanks to it that NewConnect has a nature of a market completely separate from – let us call it – “the big stock exchange”.

Emil Stępień, Deputy Executive Director of NewConnect’s Department of Development, was interviewed by Maciej Mazerant.