Jiří Horyna eMan: we are going to the Stock Exchange to set ourselves free from bank debt. A listed company is also more trustworthy.

Why is a company with a ten-year history suddenly heading to the Prague Stock Exchange and why to the Start market, not the main market?

That decision had crystallized for a long time. At the time when we were paying out our important partner Jablotron, we had to reach for not entirely negligible lending. Even then, the idea began to arise that it might not be bad to reduce our debt.

In this decision, we were further confirmed by the current situation on the market and the overall relatively complicated time, which no one completely anticipated at the time. Selling part of the company will allow us to get rid of bank liabilities and focus all our energy on the company’s products and development instead.

However, this is only one reason, the other one is related to the fact that in recent years we have been regularly approached by various entities with an offer to buy our company. This is tempting on one hand, but this type of players is usually interested in buying the whole company and we do not want to exit or give up a controlling stake, because we still enjoy the job. The stock exchange represents a way to maintain a controlling majority and to obtain the necessary capital for further development. Also, it seems to us as probably the cleanest form of a participation of other entities in the company.

In addition to trying to get some financial resources and free your hands from bank debt, there are some less intuitive secondary reasons, such as better communication with the public. When you are on the stock exchange, you are more in sight, more is written about you and so on. Another thing we have had confirmed from other entities that went to the Start market is that the fact that they are listed on the stock exchange helped them with some foreign customers. A listed company looks more trustworthy. In the Czech Republic, this factor does not have such a weight, because there is a lack of a longer tradition but in the German market it does have an additional value to customers.

And why Start market? We didn’t even think about the “big stock market”. I think that we are not suitable for the main market due to our size.

You would probably be able to meet the minimum conditions for the main markets, on the contrary, the Start market is already for much (up to four times) smaller companies. For example, do you mind that your shares on the Start market will be traded in a shorter time window than on the main markets?

I believe that the Start market is much easier for smaller entities to both operate and work with risk. The frequency of trading at Start has shifted eminently since its inception, so the difference between the main markets and Start market is not significant for a casual trader or investor. (The Start market started trading in shares once a month, but since this spring, shares have been traded on a daily basis, although only from 9.00 am to 12.30 pm, ie about half the time it is traded on the main markets – editor’s note.)

The Prague Stock Exchange does not have a historically ideal reputation; in addition to less liquidity, it is also accompanied by affairs, such as KIT digital. Have you not considered entering a similar foreign market, such as the Warsaw Stock Exchange, which offers much more liquidity, but otherwise similar conditions for the entry of smaller companies?

I can’t say that we would be downright overly patriotic, but we found it sympathetic and, at the same time, as a Czech subject, it is completely natural to try to actively change and move the Czech market a little more. However, I don’t want it to sound like we are some conceited megalomaniacs. We want to contribute a little to the mill. It is also due to the fact that we have some personal ties to the Prague Stock Exchange, which is not the case with foreign ones. We also like the support and attitude of the people from the Prague Stock Exchange which is very sympathetic and seems serious to us, so it was to some extent perhaps an emotional decision. Maybe we made a non-business decision in this regard, and we take it more personally than pragmatically.

So how much funds do you plan to raise in this way (at least in the first phase) and how much of the company do you want to sell for investors?

We want to sell, but here is an important word “up” to 47% of the company. How much we release now will depend on the initial interest and also on how the market values ​​us. What is important is the fact that, as all four partners, we want to maintain a controlling majority. In addition, last week we offered 20 regular employees to buy eMan shares on favorable terms. This is a relatively small share, which in total represents 2.3% of the company.

How many shares will go public on the stock market in the first wave and, a bit from that, what could be their introductory price?

The original four founders retain 51 percent of the company, just over 2 percent were acquired by team members, the remaining less than 47 percent will be offered in the form of a public subscription to investors. The introductory price could be around CZK51-58 per share (the lot could start at about CZK25,000).

What did the preparation for admission to the stock exchange entail for you, and did something come up that surprised you?

I’ll start from the back. I certainly don’t think anything would have surprised us. The main reason is that we have invited two renowned entities to join, namely the law firm with which we have been cooperating for a long time, and Starteepo, which has already successfully placed some entities on the Start market. As for the scope of the preparatory work, I actually expected it to be worse. On the other hand, I should say that we are not there yet. At the moment, our final prospectus is on its way to ČNB and it is possible that it will be returned to us for a revision, and in the end it could turn out that the process was not so simple as it seemed.

The individual steps consisted of the need to prepare an investment teaser for potential investors (presentation of the company and its management), the company was initially priced by the stock exchange itself, but secondarily by future investors themselves according to what they would expect according to our business results and the customers that the company should have value for. The next step is the change of legal form to a joint-stock company itself, and in our case we made it a little more complicated by dealing with employee shares. Both involve long-term administration and the preparation of contracts.

Last but not least, you are preparing a prospectus, which is a relatively comprehensive document where, in cooperation with lawyers and your IPO adviser, you submit all your economic and legal documents and at the same time submit a justification for why you want to go public. Another thing that is connected with it is a significant communication and PR. Suddenly, you have to present yourself much more actively to be attractive to investors.

The whole interview (CZ only) is available at:  https://www.lupa.cz/clanky/jiri-horyna-eman-na-burzu-se-jdeme-osvobodit-od-bank-kotovana-firma-taky-pusobi-duveryhodneji/