HBOR invests at least 100 million euros in investment and IPO funds

HBOR plans to invest a total of at least 100 million euros in various investment funds over the next five years, including an IPO fund, whose primary goal would be to support companies in going public, it was highlighted on Wednesday at the 2nd HBOR Invest conference ‘Capital Market, Key to Economic Development’.

This was stated by the President of the Management Board of the Croatian Bank for Reconstruction and Development (HBOR) Hrvoje Čuvalo, who reminded of HBOR’s business strategy for the period from 2025 to 2029, valued at 5.5 billion euros, which is based on five key strategic goals and areas. These are the development of the capital market and fund industry, internationalization, regional and social development, investments in competitiveness and resilience, and finally, the green transition, for which at least one billion euros is planned to be invested over five years.

Regarding the first mentioned segment, Čuvalo emphasized that HBOR intends to invest at least 100 million euros in various investment funds over the next five years, particularly in niches that the market lacks.

Based on a public call, decisions have so far been made regarding investments in three investment funds, and ‘deep dives’ for several other funds are underway, he noted.

He highlighted that the Government’s strategic framework for the development of the capital market emphasizes the significant role of HBOR as an institution that should encourage the establishment of specialized investment funds, one of which is the IPO fund, an initiative that was mentioned in September by the Deputy Prime Minister and Minister of Finance Marko Primorac.

Formation of the IPO fund

Čuvalo reported that preparatory activities for the formation of this fund are underway, exploring European models and practices that could be applied, and the entire process should be completed by the end of next year.

He explained that the primary goal of this fund would be to prepare companies for going public, which would also include investments in corporate functions and processes that these companies must have for listing. Additionally, activities may also include direct investments in these companies, but, Čuvalo emphasized, primarily with the aim of attracting other private investors.

– Private investors should feel more secure when they see that a state bank is also ‘inside’. This should encourage them to invest their capital. That is the point, not for a public bank to invest alone in the IPO shares of a company – Čuvalo explained, adding that it is still early to say how much HBOR will invest in the IPO fund.

The head of HBOR also announced that this domestic development bank will establish a subsidiary in the next year or two, specialized exclusively for activities and operations related to the capital market.

He reported that HBOR has so far invested 118 million euros in ten investment funds. According to him, if two funds operating under the Three Seas Initiative are set aside, the figure comes to 80 million euros that HBOR has invested or committed to invest in eight funds of which it is the initiator.

These eight funds have so far supported more than 230 investments in various sectors, and are currently ‘valued’ at around 500 million euros, which means that for every euro invested by HBOR, more than five euros have been generated from other investors.

– That is the essence and purpose of HBOR’s operations in the capital market and the fund industry – to attract other investors through its initiatives and investment examples – Čuvalo stated.

The goal is to create a larger, more liquid, and attractive capital market

The State Secretary in the Ministry of Finance Tereza Rogić Lugarić stated that the development of the capital market is one of the strategic priorities of the Government, which is seen not only as an opportunity for citizen investments but also as a crucial source of financing for small and medium-sized enterprises, which still significantly rely on bank loans.

Thus, the Government has adopted a strategic framework for the development of the capital market this year, along with an accompanying action plan whose activities are being implemented in cooperation with several institutions, including HBOR, the state secretary said.

She also mentioned the IPO fund, ‘the possibilities of establishing which HBOR will explore’.

– This fund will give our small and medium-sized enterprises a boost in further growth and development as they will access the much-needed capital in a faster and simpler way – she said.

She emphasized that three IPOs have occurred this year on the Zagreb Stock Exchange, with a significant presence of small shareholders, and that the main domestic index Crobex could soon reach 4,000 points, a level it has not seen since 2008.

– The goal is more than clear – to create a larger, more liquid, and attractive capital market – concluded Rogić Lugarić.

The significant role of the EIF

The State Secretary in the Ministry of Regional Development and European Union Funds Zrinka Raguž stated that the Government continuously provides an efficient basis for the growth and development of the venture capital industry through financial instruments.

She stated that in the previous financial period 2014 – 2020, the startup market in Croatia was revived thanks to the successful launch of the first generation of the ESIF venture capital financial instrument, with a financial envelope of nearly 46 million euros.

In the current financial perspective, the second generation of the venture capital fund has also been secured, for which an initial 60 million euros is planned from EU funds, along with 20 million euros from the first generation of the instrument and 20 million euros of private capital, Raguž said, who emphasized the key role of the European Investment Fund (EIF) in the successful implementation of both generations of the fund.

Merete Clausen, Deputy Chair of the EIF Management Board, also addressed the attendees, emphasizing the importance of partnership with HBOR and other Croatian institutions.

She reported that EIF has so far invested around two billion euros in various projects and through different instruments in Croatia, supporting about six thousand small and medium-sized enterprises. This financing has stimulated investments that have reached a total of around five billion euros, she highlighted.