D.Maikštėnas, who took a breather on the stock market after the first day of Ignitis grupė: on the influence and criticism of the US elections on Facebook | Deal

Shares of state-owned energy group Ignitis grupė began trading on the Nasdaq Vilnius and London stock exchanges on Wednesday. According to the head of the group Darius Maikšt casinas, almost 500 million were received during the IPO. The amount has already reached the company’s accounts and should now be used successfully for investments.

– „groups on“ Entering the stock market and to that extent is an exceptional event. How do you evaluate the success of the IPO yourself?

– It is a great success for the group, for the whole of Lithuania and for the region, as attracting almost 500 million euros of share capital is an unprecedented event. If we delve into the level of investors that they are, it is undoubtedly a great success. Imagine when we see future investors in Lithuania, we hear about one hundred, two hundred million investments. Perhaps there is half of that equity capital, the other is debt capital.

In this case, when 500 million equity shares come to the country, they add more debt leverage, so this amount of foreign investment came to Lithuania on this day.

– The money is already in the accounts. How will you strengthen the group?

– Yes, money in the accounts. This will strengthen the capital base, and that is enough for us to implement our strategy for 2030. And that is: develop green production up to four gigawatts, modernize the networks, guarantee the necessary amount of energy for flexible production. So that the country is safe before and after the synchronization of electrical networks.

– How do you assess the fact that already on the first day of the trading session the share price fell even below the minimum cut-off price?

– We did not predict or pay attention. I had no expectations. You need to separate it from that bubbling in the short term, it’s natural. That is why it is natural that in the first days there are price fluctuations. What matters is how the stock’s value develops over the years, two or three. In our case, we have two strategic periods: until the end of 2023 and until 2030. Therefore, an IPO has been concluded for this investment period, so we are very happy that many Lithuanians are participating in it.

– Do you think there are many newcomers to the market who are interested in this opportunity?

– Definitely so. Out of a thousand passive investors, we now have seven thousand investors, and this notoriety will lead to even greater awareness across the market. See what happened to local pension funds. In my personal opinion, more than a million Lithuanian citizens who participate in the accumulation of second and third pillar pensions currently have Ignitis in their portfolio of stocks.

– „Ignitis probably reminded the part of the IPO group of people with good memories of the distribution of shares in Lietuvos Telekomas. Then the state encouraged us to do the same, many people were tempted to buy shares in the company, but after a while we only saw a drop in price. Don’t you see parallels to the story of the Ignitis Group IPO, even though the time is different?

– It was a completely different situation. It would be difficult to comment in detail. The listing came at a time when the price of a strategic investor was resisting. When Lietuvos Telekomas was privatized. Back then, markets believed that only fixed networks had a future.

Mobile operators came and showed that there are other alternatives. Then it affected the development of markets. If efforts are being made to maximize returns on the first day of trading, it is not known whether the pigs will be traded in the long term. This is similar to what happened in the Lietuvos Telekomas case.

– Let’s go back to today. Ignitis grupė shares were distributed in the lowest price range, that is, the lowest price. Why do you think the upper price limit has not been reached?

– It was successfully distributed in the expected price range. At the point where the cuts intersect, where the demand is greatest, it is advisable to set the price. It was also important for us to have quality investors, so that the number of long-term investors was dominant. And we have succeeded, two thirds of them.

– Some question if it was the right moment for the IPO distribution, when the markets are still not sure. Maybe a translator to wait? In general, is the timing of distribution related to the political cycle? Until the elections only a few days, and there are those who believe that this is a kind of gift for the rulers.

– There are two things here. When you start preparing for an initial public offering, it’s a huge job. It has to do with the presentation of financial results. It is necessary to hold several hundred meetings with investors, prepare the market, find out what price ranges are appropriate. All of this is done for six months. It is impossible to predict the exact date: whether the COVID-19 test will be positive for the president of the US or not, or other circumstances. It was applied to the post-summer period.

Yes, we focus on the elections, but not in Lithuania, but in the United States.

Get out with an IPO in two to three weeks – the window would be closed by now. All important cycles in the distribution of emissions of this magnitude are in global politics. Local politics are not affected.

– Could the infection of the president of the United States with COVID-19 also have had an effect?

– He could. And if an even deeper crisis had arisen during distribution, I don’t know what it would have been like. For example, if there is a military conflict between the United States and China, then we should take a step back.

– Some market experts say that the coronavirus has affected distribution – after all, there are usually live meetings with investors, and this time you could not do it for objective reasons?

– Yes, we were able to have physical meetings with Australian investors. We were able to extend the meetings in Europe and finish in California. So there are advantages. Local meetings added, but now weighing what could and could not be difficult would be.

Meetings were not the biggest restriction, but overall that for the biggest investors Lithuania was terra incognita, it wasn’t on the map. To show that Lithuania is a Western country, that regulation is independent and that governance is at Scandinavian level, that is what we have done a lot here.

– What about the observation that there was not much interest between Latvians and Estonians?

– As for the Estonians, we will look further, because it is a developed market. Therefore, a comparison with the number of IPO investors in the port of Tallinn would not be entirely appropriate. When it comes to distributing shares in the port of Tallinn, keep in mind that they were simply cheaper. In the case of Ignitis, the yields are lower, but greater growth potential, greater resilience. The number of Estonian participants will increase, but not immediately, but gradually. Apparently local markets still don’t fully understand. We are seeing a breakthrough in Lithuania. I think interest in stocks will continue to grow.

– Why did you decide not to disclose the information, what was the demand for the IPO?

– This is the first of its kind to be covered by the IPO in the region, it must follow the rules of good practice that have been adopted globally. This year there were nine IPO distributions on the London Stock Exchange. No one disclosed the lawsuit because it is standard practice. There has never been a banking union in our countries that comes with money. It is recalled that no state-owned shares of Ignitis Group were sold. As much as there were property and rights, both still have them.

– With such backward capital, will you study purchases more, especially those related to green energy?

– Until 2023, we will operate in the Baltic countries and Poland, because there is great potential to develop green production. A total of 24 gigawatts. The priority, of course, is given to Lithuania, but we are going elsewhere to ensure a good return for shareholders. If the conditions are right to move forward, we will. An investment is planned for a Scottish wind farm with Ocean Winds.

– His predecessor, the former director of Lietuvos Energija, Dalius Misiūnas, did not skimp on criticism for this IPO distribution, he says that it was not successful, it was not executed on time, and the lower price range, according to him, shows that he did not prepare adequately for it. How would you respond to the former manager’s criticism of Facebook?

– I do not know the reasons why the former manager comments so much. More than once he has commented in various ways and made various predictions, but after a while not all came true.

– I remind you that under your leadership Lietuvos Energija, there were also discussions to distribute the IPO, but this idea was abandoned.

– At that time, there was no point in trying, because the ratio of debt to EBIDTA was about one unit. Until you get to four, it’s not even something that interests you. The debt was so low at the time, so there was no point in strengthening the capital base. Capital strengthening is necessary when necessary. And last year that moment arrived. When you raise capital, you must decide whether to do an initial public offering, ask the state for money, or attract a strategic investor. To this end, a working group was created which decided that charging from the budget would not be appropriate. A strategic investor; again, it would dominate. You should be invited if you need knowledge and experience that you don’t have.

By the way, we do it in smaller projects, for example in offshore wind in Lithuania. 49 percent. Ocean Winds will take actions to guarantee the required level in the expansion of the offshore wind project in Lithuania. We need a strategic investor there and we needed an initial public offering.

– How will the dividend policy change?

– It will be ordered and irreplaceable: a fixed annual amount, plus three percent per year. Of course, they can grow larger.