Shares Rise after Government Announces Privatization

Total Croatia News

“Lipa” Taxpayers’ Association says the most important effect of privatization will be decreased political influence.

Investors have positively reacted to the announcement that the state will reduce its share in the ownership of some companies, which also means decreased influence on the management of these businesses. This was reflected in the price of their shares. After the announcement that the state’s 20 percent share in Končar would be sold, the price of its stock has increased about three percent. Sunčani Hvar hotels stock has gone up about eight percent, reports Večernji List on May 15, 2016.

“We believe that the most important effect of the privatization will not be the financial one, but the reduction of the influence of political elite and the parasite-like bureaucratic apparatus that draws great power from managing the public companies”, announced the “Lipa” Taxpayers Association. They ask if it makes sense for the public companies to have labour productivity three times lower than in private companies, despite their huge assets, and to have average net salaries 40 percent higher than private companies. They say that they are not questioning those truly strategic companies which have a monopoly over infrastructure, but they pointed out that the production of jams and soups, refrigerators and dishwashers, and managing berths for yachts cannot be seen as areas of strategic interest.

Meanwhile, there are fears that even after the state sells part of its share in Končar, it will still have great influence on business operations. Pension funds are ready to increase their share in the company, but will also ask for more rights in managing it.

As for Croatia osiguranje, the situation is pretty clear because the state is selling its entire stake in the company. Adris already has about 60 percent stake in the company, and if it takes over the additional 30 percent – and, as sources confirm, there is an interest for it – this will only strengthen their management of the company.

The sale of Končar, Croatia osiguranje, Sunčani Hvar and Eutelsat should be finalized in about a month and a half, and the shares will be offered on the Zagreb Stock Exchange, with the exception of Eutelsat whose shares will be offered on the Paris Stock Exchange. By this summer, shares in hotels Imperial, Maestral and HTP Korčula could be sold as well, and this would bring the planned 1.6 billion kuna.


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