Sale-Privatisation-Sale: the Croatian Way

by: SEE

The two biggest ones – Croatia Osiguranje and the Croatian Postal Bank (hpb) – we’ve already announced. And could it be, whilst the most serious bidders for the aforementioned two are becoming a matter of public record, that Minister Linić and Co. are planning, down the line, a veritable corporate garage sale?

When it comes to hpb, where the State is selling its entire portfolio (99.13%), it is the Austrian Erste Bank and the Hungarian otp Bank that have entered the second round of the bidding process, with the insiders leaning more towards the scenario in which it is Erste that emerges victorious. No trifling matter, for if or once Erste successfully completes the transaction, it will have become the second largest Croatian bank, overtaking pbz with 18.8% of the market share and placing only behind zaba. Available intelligence tells us that Erste has offered 130 million Euros, whilst otp submitted a bid according to which, depending on the model, the figures vary between 92 an 118 million Euros. Although initially it seemed that Societe Generale was also a serious contender, the French do not appear to have submitted a binding offer.

On the other front, it is the Croatian Adris (parent company of the Tobacco Factory Rovinj – tdr) and the Polish insurance giant pzu (Powszechny Zakład Ubezpieczeń) that will fight it out, in the second round, over the hefty (but minority) stake in Croatia Osiguranje, where the Government, currently in possession of just over 80% of the company’s shares, is looking to hold on to at most 30% of the same (25% + 1 share seems to be the most likely scenario).

Adris’s offer for roughly 132 thousand shares at a price of 790 Euros per share amounts to 104.2 million Euros, plus the commitment to (re)finance the company with an additional 130 million. The Polish offer is nominally higher, as they offered 900 Euros per share, but their cited additional commitment is no higher than  50 million Euros. There was also a third-party in the race, the Slovenian Triglav, but they did not apparently meet the criteria. Whatever the case, in both instances, those of hpb and Croatia Osiguranje, in the second round of the bidding process the Government expects higher offers from all parties (still) involved.

And then, just as the future of the two companies in question were beginning to shape up, the weekly Globus announced that the Government had already made plans to divest the State of as many 28 other public entities. The list, obviously, is long, and it involves, apart from four ports and seven airports, companies such as Jadrolinija, Petrokemija, Hrvatska lutrija, Hrvatska pošta, meaning everything ranging from transport and the heavy industry to ‘bingo’  and postal services. We shall report in more detail on this issue in the months to come.

And the point is that it no longer matters why the Government seems to be rather bent on staging a garage sale. The State coffers are empty, even despite Finance Minister Linić’s pseudo-heroic attempts to increase the tax take – even or especially at the expense of what remains of the private sector.