The transaction that shook the WSE: Allegro and the ABB mechanism

Allegro’s PLN 1.7 billion transaction under the ABB formula has shaken the Warsaw Stock Exchange and opened a discussion about what Accelerated Book Building actually is. Is it a tool exclusively for the big players? What are its advantages, risks and impact on the market? We explain with a practical example.

What is ABB and why is it worth knowing about it?

In the spring of 2025, the Warsaw trading floor was alive with one of the biggest transactions of recent years – Allegro shareholders sold a block of shares worth as much as PLN 1.7 billion under the ABB (Accelerated Book Building) formula. The scale of this transaction not only attracted the attention of investors,  but also had a noticeable impact on the mood of the entire Warsaw Stock Exchange (hereinafter: WSE). Allegro is not the only company whose shares have been sold in this way – similar transactions have previously involved Pepco, Wittchen and XTB, among others, with the Pepco example clearly demonstrating how ABB can be used to quickly change ownership structure without the need to engage in a large promotional campaign or a lengthy offering process.

In the capital markets space, the concept of Accelerated Book Building (ABB) regularly appears on the occasion of large share sales by significant shareholders.
From the point of view of law, economics and securities trading practice, it is an instrument used to quickly dispose of significant shareholdings in an organised manner and in line with the principles of transparency and market efficiency.

Data and scale of ABB in Poland – Baker Tilly TPA report shows:

• The median discount for ABB transactions on the WSE between 2009 and 2022 was 6.5%,
• average discount – 8.1%,
• the largest transactions included PKO BP, PGE, Cyfrowy Polsat, Allegro,
• the value of individual transactions fluctuated around several billion zloty.

Over the past several years, the largest ABB transactions involved companies controlled by the State Treasury, particularly banks. These included the sale of shares in PKO in 2013 for over PLN 5 billion, Pekao for around PLN 3.7 billion also in 2013, or PGE in 2012 for over PLN 3.5 billion.

What is ABB? – a practical approach

Accelerated Book Building is a mechanism used to sell a large block of shares quickly, usually within 24-48 hours. In practice, it consists in the following: the owner of a large block of shares (e.g. an investment fund), instructs a brokerage house to find buyers, and the entire routing process takes place off the shelf (which protects the price from destabilisation).

• Book building is a compilation of bids submitted by interested institutional investors – pension funds, insurance funds, TFIs, asset managers. The brokerage house analyses the bids and allocates shares to those who offer the best price and volume conditions.

In practice, before the book-building process begins, the selected funds are invited to a so-called wall-crossing procedure. This means that they are provided with confidential information about the planned transaction on the condition that they keep it confidential and commit to temporarily prohibit trading in shares covered by ABB. This mechanism, which is in line with MAR (Market Abuse Regulation), serves to ensure compliance with market abuse regulations and requires high compliance standards.

Can ABB involve the issuance of new shares?

Although ABB generally concerns the sale of existing shares by existing shareholders, it is also sometimes used – in more complex structures – to issue new shares quickly, most often in large companies with high capitalisation and a prepared formal background.

Why is ABB used? – The interests of the parties to the transaction

The seller (shareholder or company):

• wants to liquidate the shares quickly without affecting the market price,
• avoids “pushing” large volumes through the market, which would trigger price declines,
• often acts in a window of opportunity – with a favourable economic climate or high valuation.

Institutional investors:

• gain access to large holdings at a price below the market (known as the discount),
• can build a significant position in the company faster than through the regulated market.

The company (in the case of ABB as a new share issue):

• raises capital in a more flexible manner than in a classic IPO – Initial Public Offering.

ABB in the world – international context

The ABB mechanism is not a Polish invention. It operates throughout the developed world and the developing world:

• In the US, the equivalent of ABB are often ‘block trades’ or ‘overnight offerings’ – transactions conducted after the session, usually with the help of investment banks.
• In the UK, France, Germany – ABBs are standard procedure when private equity funds exit listed companies.
• In Asia (Hong Kong, Singapore, Korea) – ABB is also sometimes used by the companies themselves to quickly raise funds through share issues.

In countries with high liquidity (USA, Germany), ABB is less likely to lead to large share repricings. In less liquid countries, such as Poland or Hungary, the market reaction is stronger, as the impact of a large package on the stock price can be significant.

Criticism of ABB – why is it controversial?

ABB is effective but not without flaws. Individual investors accuse the mechanism:

• of a lack of transparency – information about ABB only reaches the market after the book is closed,
• of favouring large investors – the process is closed to small players,
• of a downward price effect – ABB is often preceded by significant discounts on the stock market.

However, from a legal point of view, ABB does not violate the principles of equality if the confidential information has not been illegally disclosed and all participants know the rules of the game.

Summary 

ABB is an internationally recognised procedure for the efficient trading of large blocks of shares that fully complies with capital markets law. Although it is not free from emotion and controversy, it is an important part of the securities trading infrastructure – especially in periods of prosperity and high investment activity.

In Poland, ABB is gaining importance and is likely to be increasingly used, both by private investors and state institutions. From a regulatory perspective, it is important to continue to ensure the transparency of the process and to eliminate information asymmetries between market participants.