Вy the end of April, the Bulgarian government is expected to take bids for its 44 percent stake in the Bulgarian Stock Exchange, based in Sofia. Recently, the BCPP announced it will join a crowded field bidding for the tender.

If the bid is successful — far from a certainty, with many larger exchanges also interested — an expansion into Bulgaria would be the BCPP’s first foreign investment.

“We see great potential in a dynamically growing Bulgarian market that can be, based on our experience, developed even further,” BCPP General Director Petr Koblic said after meeting with representatives of the Bulgarian government in late March.

By officially confirming its interest in taking over a minority share, the BCPP joined a row of other would-be candidates, including the stock exchanges of Vienna and Warsaw, the Deutsche Borse and OMX, the Swedish exchange.

In contrast to some of its competitors, the BCPP lacks experience in foreign partnerships. This inexperience should not be considered a handicap in its bidding, said Jiří Kovařík, spokesman for the BCPP. The exchange rates its chances to win the tender quite highly, he said.

“In contrast to our competitors, we went through a development period very similar to what the Sofia stock exchange is experiencing now,” Kovařík said.

The Prague bourse experienced dizzying growth during the early 1990s, thanks to massive privatization, but then went into equally steep decline until the early part of this decade. Sofia’s development mirrors what Prague went through, Kovařík said.

A major consideration in the tender will be the requirement that the winner can guarantee the further development of the Bulgarian exchange. Koblic said implementing the BCPP’s trading scheme in Sofia could fulfill that promise.

“The Prague Stock Exchange benefits from having our own tailor-made trading system that, apart from standard trading methods, also allows trading with market makers,” Koblic said. These market makers, who offer quoted prices to buy and sell stocks on a regular basis, bring an important liquidity to the stock exchange, he said.

“I’m convinced that using this scheme in Sofia would bring the desired benefits to the Bulgarian market,” Koblic said. Kovařík said that the investment would simply be good business.

The overall trading volume of the Bulgarian Stock Exchange reached 1.7 billion euros ($2.3 billion/47.6 billion Kč) in 2006, and its market capitalization was 7.8 billion euros. For the same year, the BCPP’s trading volume stood at 30.9 billion euros, with capitalization reaching 57.9 billion euros.

Market analysts, including Patria Finance’s chief economist David Marek, say the Bulgarian market has promising potential.

“The market looks set to copy the development of stock exchanges in Prague, Budapest and Warsaw,” Marek said. “It should be growing in terms of volume and capitalization, and so becoming its shareholder should be advantageous.”

The participation of the BCPP in the tender proves the successful recovery of the Prague market, Kovařík said. “In the late 1990s, when the Prague market was in decline, many people even questioned the sense of the BCPP and whether it should exist at all,” he said. “That we’re now bidding in Bulgaria proves that we don’t just need to be a possible acquisition victim. We can pursue other exchanges as well.”