Renaissance on the Stock Exchange: Ing-Grad Shares to Fina, New Attempt by Studenac This Fall

New listings of companies on Zagrebačka burza are making a comeback this year in grand style, somewhat evoking the golden times of 2006 and 2007 when the market witnessed ‘people’s’ privatizations of INA and Hrvatski Telekom. Today, however, there will not be such large initial public offerings (IPOs) backed by the state selling its shares, but that does not mean that citizens will not be able to engage in interesting investment stories.

The first company expected to come to the stock exchange this year through the sale of shares to small investors is the construction company Ing-Grad. As reported in local media, Ing-Grad confirmed back in December that it is preparing for an IPO. The prospectus, a key document that provides interested investors with an in-depth look at the company’s operations, is currently awaiting approval from the Croatian Financial Services Supervisory Agency (Hanfa). If all goes according to plan, Ing-Grad shares should appear on the stock exchange by the end of this month.

According to Span’s Recipe

Danijel Delač, CEO of Interkapital vrijednosnih papira, which is arranging Ing-Grad’s share offering, emphasizes that the prospectus has been sent to Hanfa for approval, after which a Public Invitation will be announced, allowing interested investors to participate in the public offering of shares.

– At this moment, the focus is on defining a transparent and open process for the initial public offering that will allow all interested investors to participate in accordance with the rules and regulations – Delač told us.

—

Danijel Delač, predsjednik Uprave Interkapital vrijednosnih papira

foto Rene Karaman

—

So far, it is known that this construction company intends to raise around 50 million euros in fresh capital through the public offering of shares. The price at which the shares will be sold is not yet known, at least until the prospectus is published. According to recent reports from Poslovni dnevnik, new shareholders would acquire about 30 percent ownership. Given the targeted size of the offering, this implies a market capitalization of the company after IPO of around 150 million euros.

In this IPO, regarding the range of investors, Ing-Grad will follow the tried-and-true recipe of the IT company Span, whose stock market debut in 2021 was exceptionally successful. Namely, in addition to institutional investors, Span also offered shares to employees and small investors. Ing-Grad will repeat this, and as we unofficially learn, the subscription of shares for small investors will be facilitated at Fina branches, as was the case with previous subscriptions of treasury bills and people’s bonds. Given the widespread presence of Fina’s branches, this would capture a large number of interested investors.

Delač states that ‘all details will be clearly defined within the Public Invitation, and the intention is to enable subscriptions for interested investors throughout the territory of the Republic of Croatia’.

– After the Prospectus is approved, Ing-Grad will announce a Public Invitation to participate in the public offering of shares, which will specify all conditions, including the period during which interested investors can submit their offers – adds the head of Interkapital Securities.

Listing Under the Management of Pension Funds

Žito, owned by Marko Pipunić, according to previous media reports, has begun preparatory actions for its stock market debut, such as last year’s transformation from a limited liability company to a joint-stock company, and reportedly financial advisors have been engaged. For now, the whole story is in its initial phase and does not necessarily mean that Žito will ultimately go public. Recall that the company considered this move six years ago, but at that time it had a rather complex structure.

As unofficially reported by Lider, during the year, another smaller technology company is quite likely to go public, which will be recapitalized by pension funds. Regulations require that all companies whose shares are held by pension funds must be listed on the stock exchange, so in this case, it will be a listing ‘by force of law’, without the participation of small investors. The fourth stock market debut could be under the management of Studenac. The retail chain, after failing in December due to – as they stated – insufficient investor interest, plans to repeat the initial share offering in September, as heard in financial circles. From Studenac’s corporate communications, they stated that it is the company’s business practice not to comment on speculation and conjecture.

In any case, this year should be very interesting regarding new issues. The last IPO on the domestic stock exchange was made in the spring of 2022 by Mon Perin, a tourism company from Bale. Ivana Gažić, CEO of the Zagreb Stock Exchange, believes there are signs of a positive trend regarding new listings.

– Although there have been no new stock listings in recent years, many companies are actively using the stock exchange to finance their growth and development, through recapitalizations or instruments such as green bonds. The debt market is on an upward trajectory, and the latest issues of government bonds and treasury bills, as well as ETFs, have shown that there is indeed capital and interest, it just needs to be mobilized – assesses Gažić.

Moving Away from Banks

In her opinion, companies will certainly have to utilize the potential of the capital market to strengthen their business and move away from the bank-centricity of our system, especially in challenging banking credit conditions. It is worth noting that at the peak of the market nearly 20 years ago, IPOs on the Zagreb Stock Exchange were at the top of the European rankings. After INA went public in a people’s privatization in 2006, Hrvatski Telekom (HT) followed a year later with an IPO worth 7.05 billion kuna. An additional six IPOs, including the listing of shares of Atlantic, raised the total value of issues in 2007 to over 1.2 billion euros.

—

Ivana Gažić, predsjednica Uprave Zagrebačke burze

foto Ratko Mavar

—

If parallels are drawn between the then and now, those years were marked by an exceptional market surge, a whole series of new listings and successful stock market stories occurred, and a large number of small investors expanded the investment base, says Ivana Gažić.

– For example, in 2006, trading in shares (10.45 billion kuna) nearly reached the total trading in shares in the previous five years. At that time, our market and the entire economy were still extremely young and ‘overheated’, while today we can say that the market is in a mature phase of stabilization. It may not seem so ‘attractive’ at first glance, but fundamentally this is just the beginning of real, structured development. The time nearly 20 years ago was entirely different in all circumstances, almost incomparable on most levels. However, what is common is that when there is an attractive and well-prepared investment story, interest does not wane – assesses Gažić.

Good Preparation, Guaranteed Success

The listing of Span, as well as the interest in government debt securities along with last year’s 40 percent increase in investment fund assets, shows that citizens’ interest in the capital market has returned. Ivana Gažić reminds us that all recent issues have been extremely successful.

– Our market has great investment potential, and all quality and well-prepared issues can expect significant interest from small investors. The success of government bond issues confirms this thesis – concludes Gažić.

The ball is in the court of company owners. Expecting the state to privatize shares in companies that serve it for political staffing on the stock exchange is, after all, overly optimistic.