Spacva: Large Eastern Croatian Company Seeks Strategic Partner

Lauren Simmonds

As Novac/Jozo Vrdoljak writes on the 23rd of November, 2020, back in mid-October, Spacva, an Eastern Croatian company from Vinkovci, received a letter from Quaestus Private Equity Capital. The latter is the owner of four million shares, which is a 75.81 percent stake in Drvna industrija Spacva, and the letter stated that this was to be the last year of the fund’s participation and that actions regarding the exit from ownership and the sale of Spacva’s shares had begun.

Davor Doric, a member of the Management Board of Quaestus Private Equity, didn’t want to comment on the process of exiting the fund because, as he says, these are sensitive processes.

”Quaestus has invested in Spacva on two occasions, once in 2013 and then again back 2017. Just before the first investment, in 2013, Spacva entered into a pre-bankruptcy settlement with its creditors. All obligations from the settlement were properly settled within the agreed deadline. Since Quaestus joined Spacva, revenue has increased significantly to around 250 million kuna, and the number of employees has increased from 570 to 850. In the meantime, investments in technology have been made in excess of 150 million kuna, which has enabled the company to grow significantly and raise its operational efficiencies. Spacva fulfilled the plans and expectations of the fund and is a good example of achieving the role of funds when engaged in economic cooperation,” said Davor Doric.

It’s worth noting that the investors in the fund are the Croatian Government itself, with a share of 50 percent through HBOR, pension funds and other institutional investors, which make up the remaining 50 percent. Spacva was founded back in 1956 under its original name – SEC Slavonian Oak. The main activity of this Eastern Croatian company is wood processing and production of wood products. Spacva also engages in several additional activities such as furniture production, the wholesale of furniture, wooden, wicker and cork products, and among them are construction and trade intermediation. Basically, over the coming months, Quaestus Private Equity Capital II needs to find a new investor for Spacva, reportedly before the end of February 2021.

The interest of Darko Pervan, owner of Pervan Invest in Sweden and the company Bjelin, which was created after he took over Tehno drvo with plants in Bjelovar and Ogulin, where he also had large investments, as well as the Otok Veneer Factory in Croatia, has since been confirmed. Pervan’s interest was confirmed by the President of the Management Board of Bjelin, Stjepan Vojnic.

”At this moment in time, it’s difficult for me to say whether we will go and make an offer to take over Spacva or not. There’s a lot of dilemmas there, from how to fit Spacva’s production programme into our production programme and our business, and how to maintain high employment within Spacva. We’re still in the testing phase because it isn’t easy to take over such a company. Every entrepreneurial venture, and such is every takeover of a company in a situation where the coronavirus pandemic continues to reign, is difficult and uncertain. We’re interested, but there are still a lot of ambiguities that we have to resolve in order to make a decision. Spacva’s biggest advantage is the quality raw material base, ie its contract with Croatian Forests. I believe that there are also more interested investors,” Vojnic pointed out.

Business results

Reliable sources show that Barlinek, a well-known Polish manufacturer and one of the largest European manufacturers of multilayer parquets, has also expressed interest. Allegedly, the representatives of this Polish company have already visited Spacva.

In the first nine months of this year, Spacva generated total revenues of 184.5 million kuna and a profit of slightly more than 9 million kuna. Sales revenues in that period amounted to 164.1 million kuna. Of the total revenue generated on the foreign market, 67.5 percent of revenue was generated. The most important export countries for this Eastern Croatian company in other areas of Europe, more specifically in Italy, Romania, France, Serbia, Germany and the United Kingdom.

”In the second half of the year, due to the opening up of key markets and the abolition of anti-epidemic measures, ie lockdown, Spacva achieved the expected revenues at the level of 2019, and in some months exceeded the planned sales revenues. We expect a successful flow of sales revenue in the last quarter if the situation from the beginning of the crisis caused by the coronavirus doesn’t happen to us again. The company is working intensively to open new markets with the aim of maximising its sales revenue. The Management Board is very carefully monitoring all changes on the market and announcements related to new measures in key European markets,” the Spacva Management Board noted.

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