Today, we bring you an overview of the much-talked-about and newest IPO on the Zagreb Stock Exchange – ING-GRAD. After years of quiet on the Exchange (the last one being SPAN at the end of 2021), finally a larger IPO is about to take place. In this overview, we bring you the main points related to it, as well as information related to the Company itself.
IPO information
Firstly, let’s talk about the IPO itself. ING-GRAD aims to offer 1.2m shares on the Exchange, representing 30% of its share capital. The shares offered are treasury shares that the Company bought from the owner in the 2nd half of 2024, a total of 34%, out of which 30% is being offered. The price range for the IPO is between EUR 37 per share, and EUR 46 per share.
Depending on investor interest, the final price will be determined. The IPO will be conducted in one round, including employees (with special benefits), qualified investors in Croatia & the European Economic Area, and retail investors in Croatia.
In regard to retail investors, any individual or legal entity in Croatia, that does not qualify as an institutional investor might participate. The minimum investment amount is EUR 500.00, with no upper limit, although allocation may be subject to demand. To apply, one has to submit an “Izjava o prihvatu ponude”, i.e. the Statement of the Acceptance of the Offer. This form must be filled out and submitted within the subscription period (more details below). The form is available on ING-GRAD’s website: https://ipo.ing-grad.hr/en/, ZSE’s website: https://zse.hr/en/ipo-spo-news/635.
To participate, the investor must declare the total amount (in EUR) they are willing to invest. The number of shares they receive depends on the final IPO price. Investors must deposit the declared amount within the payment period set in the IPO schedule. If the excess share price is lower than expected, excess funds will be refunded, while if the demand is higher than supply, the allocation process will determine the final number of shares received.
In regard to the price, will be set after the book-building process with institutional investors. Meanwhile, the allocation rules are as follows: retail investors and employees have a priority over institutional investors. Higher bids and earlier submissions may have better chances of allocation. Final allocation depends on demand and will be set by ING-GRAD’s management, following the book-building process.
ING-GRAD IPO timeline for retail investors
| wdt_ID | Event | Approximate Date |
|---|---|---|
| 1 | Retail investor subscription period starts | 24 February 2025, 9:00 CET |
| 2 | Retail investor subscription period ends | 6 March 2025, 12:00 CET |
| 3 | Final IPO price and allocation announcement | 6 March 2025 |
| 4 | Payment deadline for allocated shares | 6 March 2025 |
| 5 | Settlement & transfer of shares to investors | 7 March 2025 |
| 6 | First trading day on ZSE | 10 March 2025 |
Source: ING-GRAD
However, investments aren’t without their risks, and these are the main ones according to the prospectus:
- Stock price volatility: The market price after listing might fluctuate significantly
- Liquidity risks: If the trading volume is low, selling shares may be difficult
- Dividend uncertainty: While the Company committed to EUR 2.60 DPS in 2025, there’s no guarantee that dividends will be paid in years afterward
- Macroeconomic risks: Construction is a cyclical industry, affected by economic downturns
- Competitive pressure: The Company faces competition from both local and international companies
On the other hand, the things that the investors could benefit from are the following:
- Growth & industry: Access to a growing company in a stable industry
- Stock price potential: Potential for stock price appreciation after listing
- ING-GRAD’s position in the industry: Opportunity to own shares in a leading construction company in Croatia
- Retail investor priority: Retail investors receive priority allocation compared to institutional investors
In regard to the expected usage of the IPO proceeds, ING-GRAD plans to use the funds for strategic acquisitions, particularly in geotechnical engineering as well as other specialized construction segments. It aims to improve employee rewards and retention and to attract talent across the industry. Lastly, it aims to strengthen the financial position for future growth and project execution.
Company information
ING-GRAD is a leading construction company in Croatia, with over 30 years of experience in the industry. The Company has throughout its history participated in dozens of projects in its 3 main segments, both small and large. These segments include the most complex restoration of cultural heritage, for which out of thousands of construction companies in Croatia only a small fraction can say they can execute. Next up, we have the energy, infrastructure, and environmental protection segment, which while less complex compared to the cultural heritage, is a more complex segment in general, meaning only a couple of hundred companies can execute. Lastly, we have the commercial and residential segment, on which most of the companies in Croatia are focused.
Due to this, the restoration of cultural heritage carries by far the highest EBITDA margins (18%+), energy, infrastructure, and environmental protection, with margins around 10-11%, and commercial and residential segments, with margins at high single-digit levels.
ING-GRAD key financial results (2024 vs. 2023, EURm)
Source: ING-GRAD, InterCapital Research
In terms of the financial results, in 2024 the Company recorded revenue growth of 32.6% YoY, EBITDA of EUR 21.9m, with an EBITDA margin of 16.9% on total revenue, and a net income of EUR 16.7m, with a net income margin of 12.9%.
Going forward, the Company has a backlog (contracts signed but still not recognized as revenue) of EUR 316.1m. This includes more than a dozen major projects, with the majority of projects (>80% of revenue) in the restoration of cultural heritage segment. Most of these projects are slated for completion in 2025 and 2026, with only a few remaining by 2027.
Due to this, the Company is expected to have stable cash flow in the next 2 years, and due to brand recognition and experience, the demand for the Company’s services remains high. One other positive thing about the Company is its lean business model. This means that the Company has a certain number of employees with which it can complete a certain amount of projects, and the rest it outsources to its subcontractors, with which it has good cooperation. This model allows scalability, allowing the Company to take on more projects than its headcount would imply, but also flexibility, allowing it to increase/reduce operations as needed. This means its fixed costs are quite low, while variable costs can fluctuate, but are more manageable. Given all of these factors, the Company’s current position seems strong and stable.
And for our clients, stay tuned for a detailed Company Research, coming sooner than you might expect :).
