How Newly Listed Companies Traded on the ZSE and Why Span’s Stock is a Sensation

Shares of new issuers on the Zagreb Stock Exchange, almost all of which have been listed in the last two years, are traded very little and sporadically. The main reason for this is that most companies on the ZSE now primarily come only because it is a legal prerequisite for them to be taken over by pension funds. For this reason, investors are eagerly awaiting a genuine stock, such as Span’s, which could finally pull other companies from the IT sector to decide to go public.

According to data from consulting firm EY, in the first half of this year, 27 percent of all initial public offerings (IPOs) globally were from the technology sector, making Span’s decision to list on the Zagreb Stock Exchange in Croatia truly sensational. In fact, Ericsson Nikola Tesla was the last technology company to take this step, and that was a full eighteen years ago.

– In 28 years of operation, we are clearly doing something right. We have growth results that are above average for the IT industry, employees are extremely satisfied, and clients are happy. We want this to continue in the future and for Span to outlive us all, which can only be done effectively through shareholding. I am pleased that we are listing precisely on the Zagreb Stock Exchange. We are a Croatian company, drawing all our knowledge and resources from here, so it is logical for us to be here – explains the founder and CEO of Span, Nikola Dujmović, adding that the funds raised will accelerate organic growth in existing markets and enable continued expansion into international markets.

– Span’s IPO is a story that has been long in the making and which we are finally realizing now. I expect it to positively impact the Croatian capital market. It needs to be supported because the capital market is essential for the entire economy – hopes Dujmović.

Who Listed on the ZSE in the Last Two Years

In the last two years, despite the ominous howling of the coronavirus pandemic, hotel companies Helios Faros, Modra špilja, Vis, and Villa Dubrovnik, craft brewery The Garden Brewery, real estate company Primo Real Estate, energy company Professio Energia, holding Meritus Investments, and auto parts distributor CIAK Grupa have decided to list. Recently, Hanfa also approved Spin Valis, the largest employer in the wood processing industry in the Požega-Slavonia County, to go public on the ZSE.

– We certainly see increased activity in the listing of new issuers. This is somewhat expected because in a crisis, banks reduce activity, so companies turn more to capital markets – states Ivana Gažić, CEO of the Zagreb Stock Exchange, where they hope that several more companies will list their shares by the end of the year.

However, data on the trading of shares of companies listed on the ZSE in the last two years show that they are traded very little and sporadically, and some have not been traded at all so far. In other words, since they have been listed on that exchange, not a single share of theirs has literally been sold. However, for some of them, raising capital through the sale of shares was not even the main goal of listing.

Pension Funds as a Trigger

– Listing on the Zagreb Stock Exchange was an important prerequisite for AZ pension funds to recapitalize the Company in the amount of 161 million kuna and thus acquire a 99.9 percent ownership stake in Primo Real Estate – says Saša Novosel, the director of that company, which used the money from the recapitalization to acquire a logistics-distribution center of 33,000 square meters in Sveti Helena.

Thus, they realized their first project and will continue to seek new investments in the commercial real estate market, as they intend to generate income from renting and managing properties.

A similar case is with the hotel company Helios Faros, which listed 23,595,766 shares on the Zagreb Stock Exchange in May 2020. A year passed before the first trades were conducted, and so far, a turnover of 1,950 kuna has been made with its shares valued at 15 kuna. This is not surprising since the main goal of the listing for this Hvar company was not the sale of shares. Helios Faros’s debts had been growing for years, the company was in bankruptcy, and then a public tender was announced for its sale to pay off creditors.

– PBZ Croatia Insurance and Valamar Riviera submitted a joint offer for the tender. Since PBZ Croatia Insurance is a company managing mandatory pension funds, and all companies in which pension funds invest must be listed on the stock exchange, a listing procedure was conducted on the ZSE after the acquisition – explains Vladimir Bunić, the new CEO of Helios Faros.

Although Zagreb’s The Garden Brewery listed 80,807 shares on the ZSE in June last year, no turnover has been achieved to date. Tomislav Alpeza, the CEO of that company, says they chose the option of raising capital by issuing shares because it seemed more stable and better than borrowing, but also because it leaves them room for aggressive growth over a five-year period. The Garden Brewery plans to achieve key strategic goals through recapitalization: expanding production capacity, more aggressive positioning in the international market, increasing exports in total revenue, and connecting with the company Yellow Submarine.

The hotel-tourism-agency joint-stock company Villa Dubrovnik listed 830,019 shares on the ZSE at the end of June this year and has so far achieved a turnover of 2,888 kuna. The price of its shares is 52.5 kuna. We will wait some time for a comment on the trading so far because while the acquisition process is ongoing, Villa Dubrovnik cannot communicate with the public. Namely, this luxury Dubrovnik hotel is part of the disinvestment strategy of the Turkish DoğuŞ group, which will sell its majority stake to a group of eight domestic pension funds managed by the investment company Erste. The transaction amount is not known.

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