Nov. 6 (Bloomberg) -- PGE SA, the Polish power provider that raised 5.97 billion zloty ($2.1 billion) in Europe’s largest initial public offering this year, jumped 16 percent on its first day of trading on the Warsaw Stock Exchange.

State-controlled PGE, Poland’s biggest electricity provider, climbed as much as 26.75 zloty and closed at 25.99 zloty. PGE sold a 15 percent stake at 23 zloty each last month as investors demanded more than seven times the amount of stock offered.

“Domestic funds that failed to buy as much as they wanted in the IPO are now topping up their portfolios,” said Adam Gawlik, who helps manage the equivalent of $7 billion at PZU Asset Management SA in Warsaw.

The share surge lifted PGE’s value to 44.96 billion zloty at the close, making it the biggest Polish company traded on the Warsaw bourse, overtaking PKO Bank Polski SA, which is valued at 44.39 billion zloty.

Poland had the highest number of new listings in Europe after NYSE Euronext in the first nine months of 2009, attracting 22 companies, compared with 23 at the world’s largest operator of stock markets, according to PricewaterhouseCoopers LLP statistics cited on the Warsaw bourse’s Web site. Poland is selling a majority stake in the Warsaw bourse and today is the deadline for bids.

IPOs have increased from Warsaw to Sao Paulo and New York as sellers took advantage of the more than 60 percent rally in the MSCI AC World Index of emerging and developed markets since March to unload their stakes. Banco Santander SA’s Brazilian unit raised $8 billion last month in the country’s biggest-ever IPO.

IPO’s Pulled

The revival hasn’t always coincided with bigger returns. Offerings of American companies in September and October posted the worst performance versus the Standard & Poor’s 500 Index in the first month of trading since at least 1995, data compiled by Bloomberg show. Bankers pulled U.S. IPOs of George Town, Cayman Islands-based AEI, Aviv REIT Inc. in Chicago and Dallas-based PlainsCapital Corp. since Oct. 29 because they failed to attract enough buyers.

Poland is the European Union’s only member to navigate the credit crisis without falling into recession. The European Commission expects Poland to grow 1.2 percent this year, compared with last year’s 5 percent expansion. The slowdown has hurt the country’s revenue and widened the budget deficit, prompting the government to rely on its asset sale plans to help finance the shortfall.

Asset Sales

Poland’s government, which seeks a record 36.7 billion zloty in revenue from asset sales, will offer an additional 10 percent in PGE next year. State-owned Tauron Polska Energia SA, Poland’s second-largest power group, may sell 10 billion zloty to 20 billion zloty of shares in the first half of next year, Treasury Minister Aleksander Grad said on Oct. 29.

PGE, picked to develop Poland’s first nuclear plant, is seeking cash to make acquisitions and replace aging generation capacity. The company estimates it will have to spend 38.9 billion zloty on expansion through 2012, including investment to meet European Union environmental requirements.

The jump in PGE puts the valuation at 14.2 times estimated 2009 earnings, based on the closing price and Warsaw-based BRE Bank SA’s profit forecast of 3.17 billion zloty. That’s higher than state-controlled coal producer Lubelski Wegiel Bogdanka SA, which trades at 13.1 times estimated profit after a 52 percent rally since its IPO in June, according to data compiled by Blooomberg. PGE’s net income almost doubled to 1.79 billion zloty in the first half of 2009.

Relative Value

CEZ AS, the Czech Republic’s biggest utility, trades at a price-to-estimated-earnings of 9.5. Verbund and EVN AG, Austrian utilities, trade at 13.7 and 12.4 times projected earnings, respectively, the data show.

The Polish utility may join the benchmark WIG20 Index this year, Ludwik Sobolewski, chief executive officer of the Warsaw Stock Exchange, said on Oct. 28.

The WIG20 fell 1.3 percent today, trimming this week’s advance to 0.1 percent. The gauge is valued at 15.6 times estimated earnings.

The IPO, managed by Goldman Sachs Group Inc. and UniCredit SpA, was the largest in Europe since EDP Renovaveis SA, the renewable-energy unit of Portugal’s biggest utility EDP-Energias de Portugal SA, sold 1.57 billion euros ($2.3 billion) of shares in May last year. The stock is valued at 46 times estimated profit.

To contact the reporter on this story: Pawel Kozlowski in Warsaw pkozlowski@bloomberg.net

Last Updated: November 6, 2009 12:09 EST