Fižulić ? the first harbinger of change

The town of Punxsutawney in Pennsylvania has its groundhog Phil, whom it can rely on for forecasts on how long winter will last. We have Goranko Fižulić, whom we want to rely on for forecasts on how long the crisis will last.

In a desperate search for signals indicating that the peak of the recession has passed and that better times are coming, I skeptically noted the preliminary estimate that GDP fell by 4.4 percent in the last quarter of last year, significantly lower than in the previous quarters of last year. A bit more joy came from the news that in the first month of this year, industrial production was 1.5 percent higher than in January of last year. However, the real refreshment was the announcement from Magma the day before yesterday that the Supervisory Board proposed to the main shareholders’ meeting the issuance of two million new shares through a public offering. Goranko Fižulić has thus assessed that the crisis is dissipating and that one should catch the first and fastest train for a complete exit from it.

Fižulić was the first entrepreneur who, at a time when everyone else still believed that nothing bad could happen to their business, warned loudly that we were at the doorstep of a recession. So if he is now the first to say that we are at the doorstep of exiting the recession, I hope he is right this time as well.

Now, the exit from the crisis will not be easy or painless for Fižulić. Provided that the recapitalization through a public offering is successful, which will be a real indicator that Croatia is exiting the recession, the Fižulić couple will significantly reduce their ownership stakes in Magma. If everything goes according to plan, the largest shareholder and chairwoman of the Supervisory Board, Biserka Preininger Fižulić, will reduce her stake in Magma from 31.28 to 22.18 percent, while Goranko Fižulić will reduce his from 31.13 to 22.07 percent. The Fižulićs are thus relinquishing majority ownership in the company they created in favor of fresh capital (expected to be 114 million kuna) with which they will strengthen the company for a new cycle of market competition.

Now, there is another interpretation of such a move. One of my colleagues believes that ‘Fižulić must really be in trouble if he decides to take such a desperate step.’ Although capital market analysts mostly welcomed the decision to raise funds through a public offering and do not doubt that it will be successful, there are those who are very skeptical, believing that a real market crash is yet to come.

However, in a desperate search for signals indicating that the peak of the recession has passed and that better times are coming, Fižulić’s move awakens optimism. And optimism is currently a ‘commodity’ in high demand. Whoever convincingly offers it to the market first will profit. In one way or another. Personally, I would immediately suggest to President Josipović to include Goranko Fižulić in his team of economic advisors. And perhaps someone will think of that now without my advice.