The uncertainties are certainly felt in the fund market, confirmed Slaven Kordić, executive partner at Invera Equity Partners, during the panel titled ‘Investment Funds and Growth Financing Strategies’ at the Lider Financial Forum. He stated that funds now need to start thinking about risks and implementing them into their investment policies.
Kordić also mentioned that the climate for private equity is currently ‘not great’, but added, ‘if it were easy to raise a fund, everyone would do it.’ In response to journalist Gordana Gelenčer’s question about whether entrepreneurs trust them, Kordić replied that perhaps in the past 20 years, private equity firms have leveraged the companies they acquired, leading to their failure. However, he emphasized that they negotiate both the price and all other parameters from day one so that entrepreneurs have a broader perspective of the situation.
– The more educated partner you have from the start, the easier it is – stated Kordić, whose fund finances approximately five companies out of 700 applications (ratio 5:700). He also claims that there are no shortages of obstacles in the domestic market, but it is much better than it was ten years ago, and the spill-over effect is extremely important because those who started companies and eventually made an exit will continue to invest, meaning that knowledge will not disappear from the market.
– In the end, we need time. In our industry, the greatest success is actually exit from the company, and that takes time – Kordić notes.
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The founder and CEO of Provectus Capital Partners, Igor Čičak, stated at the panel that this situation could have a positive effect on private equity because, as he claims, Europe must move towards deregulation, and he believes that this will happen soon.
– The impact of private equity on the economy is very important. Private equity investments in our region are generally five to six times smaller compared to Western Europe, which indicates how much potential we have in the domestic market – said Čičak.
Čičak hinted that Croatia already has two unicorns, and within six to twelve months, we could have another. He added that the value of VC funds in Croatia is around eight billion euros and that the significance of these funds in the domestic market will continue to grow in the future.
– The market is layered, and the dynamics are good. I believe we will get another mezzanine fund this year because there are more and more good opportunities in the market – said Čičak, adding that they need good stories, but also exits that will encourage other investors.
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Partner at Fil Rouge Capital, Stevica Kuharski, believes that the market is still under the influence of the ‘gen AI hype’, but that problems are evident when thinking about exits due to excessive uncertainty regarding any long-term planning.
– We are reaching a good level of financial literacy, but what we lack is the financial literacy of entrepreneurs and the mindset that growth is generally not financed by money from operations (when we talk about the SME segment). When entrepreneurs realize this, then change will come – said Kuharski at the panel.
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Financial consulting partner at Forvis Mazars, Andrija Garofulić, noted that his colleagues from Germany, Austria, and Poland have been telling him for some time that the situation is bad, while we do not yet feel it. However, he claims that sooner or later, this situation will also arrive in our country.
Speaking about entrepreneurs’ perspectives on private equity funds, Garofulić said that entrepreneurs see these funds as one of the exits on the path to growth.
– The problem with today’s small and medium-sized entrepreneurs is that everything is under the control of one person, which means that someone later has to change the management style, and that is not simple – claims Garofulić, noting that Croatia still needs more private equity funds. However, he emphasized that the stock market is actually the crown that is the ultimate proof of success.
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