The Croatian equity capital markets are poised to enjoy another landmark transaction with the flotation of a 32.5% stake in the country’s largest telecoms operator, T-Hrvatski Telekom (T-HT). As Euromoney went to press Croatian retail interest in the transaction was running at record levels, easily eclipsing the demand for the sale of shares in oil company INA in 2006. In the first three days of the subscription period, more than 60,000 retail investors registered an interest in the flotation, compared with the 47,000 that participated in the INA deal. Market participants believe that as many as 150,000 individuals could ultimately take part in the T-HT transaction, which will involve the company floating on the Zagreb and London stock exchanges this month.
The unprecedented retail demand posed something of a headache for joint bookrunners Erste Bank and Hrvatska Postanska Banka, and the Croatian government, given the desire to achieve a balance of domestic retail and institutional investor demand alongside institutional participation from overseas. As a result, the Croatian government decided to increase the size of the holding it will sell to 32.5%, from an initial 20% to 23%. Some 7.2% of the shares will be distributed to institutional investors and 25% to retail clients. The initial price range of K245 to K320 ($47 to $62) could also be increased ahead of final pricing on October 1, with listing on October 5.
Retail culture
In order to encourage the further development of a retail equity culture, Croatian retail investors who maintain 10 shares bought at preferential terms for 12 months will be entitled to an additional free share. Individuals can each buy a maximum of K38,000-worth of shares in the IPO, which will be the largest in Croatia this year.
If, as expected, the transaction performs well, it will cap another successful year for the Croatian equity capital market, with booming domestic and foreign interest helping to drive the market up. As of late September, the headline Crobex index had climbed from 3214 at the start of the year to 4746, up roughly 50% year-to-date. In 2006 the bourse recorded a similarly strong rise.
Before the IPO, the Croatian government owned 42% of the shares in T-HT, with the balance held by Germany’s Deutsche Telekom, which paid $850 million for an initial 35% stake in October 1999, increasing it to a 51% majority holding in October 2001. A further 7%, previously held by the authorities in Zagreb, has already been transferred to a fund supporting veterans of Croatia’s 1991-95 war of independence.