HBOR will support domestic companies in foreign acquisitions

At the second panel of the 10th export conference titled It’s Time for Acquisitions, Hrvoje Čuvalo, CEO of HBOR, Ines Ignjatović, Director of Strategic Business Development at Podravka, Josip Lasić, Member of the Management Board of Končar, and Vjeran Vrbanec, CEO of HAMMAG – BICRO participated. When asked about Podravka’s interest in Fortenova’s agricultural division, Ignjatović did not provide a specific answer, only stating that they are monitoring all developments in the domestic and foreign markets. Podravka, she continued, is low in debt and has the capacity for inorganic growth (acquisitions) and reminded that the company from Koprivnica adopted a strategy in mid-2021 with three key directions: organic and inorganic growth and digitalization. Besides Croatia, 16 of its companies operate abroad.

– Today, we already generate 2/3 of our revenue outside Croatia, and we are in the midst of an investment cycle. Last year alone, we invested 400 million kuna, and we are focused on technology and digitalization, said Ignjatović.

One of the directions, as stated, is inorganic growth for which Podravka has set criteria for monitoring acquisition targets. Speaking about the acquisition of Ljubljana’s Žito from 2015, the integration process into the Podravka Group is still ongoing today. Ignjatović stated that this acquisition achieved the strategic goal of entering the bakery sector, and currently, investments are being made in the modernization and transformation of Žito.

– A lot is being invested in Žito. We want to focus it on baking, while other productions are integrated into other production branches of the Podravka Group, said Ignjatović.

Once, Končar was a target, now it is an acquirer. The current Management is focused on growth, said Lasić, despite facing a pandemic at the beginning of its mandate, but since the second half of 2021, the company has started making acquisitions. Four have been realized, the largest being Dalekovod, which has been recapitalized, and Lasić stated that the Končar group gained a lot from this acquisition. Primarily, it is about increasing capacities that did not exist before, and on the other hand, the Nordic market opened up where Dalekovod, unlike Končar, has traditionally been present. Dalekovod is the largest with which much greater capacities have been obtained than they had, and they have also expanded into the Nordic market where they were not present.

In addition to Dalekovod, Končar also acquired two IT companies and Telenrerg Engineering, specialized in engineering electrical energy facilities in the electricity industry and industry. Some of them have used support from Hammag – Bicro, whose CEO Vjeran Vrbanec stated that they will also support programs from NPOO, with two more programs being prepared by the end of the year, and the total value of all these grants is half a billion euros.

In addition to the aforementioned, Končar also acquired the company Končar Electrical Devices, which was previously part of the Končar group, was sold, and is now back under the parent company.

– We have work, in the Order Book by the end of the first quarter, jobs worth 1.2 billion euros are recorded, said Lasić.

He also spoke about the Polish company Power Engineering Transformatory (PET) from Czerwonak, which Končar acquired in 2017.

– The Polish market is, he emphasizes, closed, it is difficult to enter, but we wanted to achieve growth, and that is why we went into that investment. For five years, we had to constantly invest in modernization, in conditions where competition is quite strong. Only last year did we start to feel the positive effect of such an acquisition, and the current demand for transformers has never been higher. When we analyze the profitability of the investment, it is important to us that it creates value for our company, said Lasić.

This is the criterion for HBOR when deciding whether to finance acquisitions, said Čuvalo, who spoke about how HBOR needs to open up to those who want to acquire foreign companies. This was recently discussed at a meeting of HBOR representatives and exporters, and companies should achieve their goals of expanding their sales network and increasing production capacities through these acquisitions.

– An entrepreneur must conduct a thorough analysis of the company and forward it to the bank. If the investment proves to be good, we will quickly sign the contract. In any case, we expect a good response from companies that want to acquire foreign companies, of course, with the interest rate we will offer to each entrepreneur according to the criteria, he said.

HBOR approved loans worth 440 million euros in the first five months, which is a third more than the same period last year. Of that, 65 percent related to investment loans. Even during the pandemic, half of the loan value related to investments, and now this ratio is slowly approaching the pre-pandemic level when 75 percent of the loan amount related to investments.