Category: Croatia

Divjak Topic Bahtijarevic & Krka has advised Entain on its acquisition of the SuperSport Group from Emma Capital. Lovric Novokmet Partneri advised Emma Capital on the sale. Clifford Chance reportedly also advised Entain, with Dentons reportedly advising Emma Capital as well.

The transaction remains contingent on regulatory approval.

Entain is a sports-betting, gaming, and interactive entertainment group. The SuperSport Group is a Croatian gaming and sportsbook operator, with a 54% market share in the country, according to a recent Entain announcement. The company expects to pay EUR 600 million in cash, and a further contingent payment of EUR 90 million to Emma in early 2023, for a 75% stake in SuperSport.

According to DTB, “the acquisition will be made through a partnership with Emma Capital, a leading investment firm based in the Czech Republic. The established new venture (Entain CEE), in which Entain will own 75% of the economic rights, is expected to drive expansion in Central and Eastern Europe.” The acquisition is expected to value SuperSport at EUR 920 million, “by far the largest all-time deal to take place in Croatia and the wider region.”

“We are excited to create Entain CEE with Emma to underpin our strategy across the CEE region and to be acquiring the leading betting and gaming operator in the highly attractive, fully regulated Croatian market,” commented Entain CEO Jette Nygaard-Anderson. “We see Croatia as an exciting, dynamic country which Entain CEE is perfectly positioned to expand from – we are very much looking forward to growing our business responsibly within the country and the region.”

DTB’s team included Partners Damir Topic, Emir Bahtijarevic, and Ema Mendjusic Skugor, Attorneys Dina Salapic, Dominik Glavina, Antonia Mihaljevic, Andrej Zmikic, Jasna Belcic, Sanja Novoselic, Olena Manuilenko, and Ana-Maria Sunko Peric, Associate Iva Vukoja, and Trainees Lorena Micik and Jure Marovic.

The Lovric Novokmet Partneri team included Partner Mate Lovric, Senior Associates Katarina Simac and Petar Alilovic, and Associates Manuel Kralj and Marijan Zivkovic.

Editor’s Note: After this article was published, Dentons confirmed it had advised Emma Capital on the deal. The firm’s team included Prague-based Partner Petr Zakoucky, Senior Associate Sona Taghiyeva, and Associates Petr Mueller, Tomas Pavelka, and Marco Meyer Vidal, Budapest-based Partner Rob Irving, Senior Associate Kamran Pirani, and Associate Sebastian Ishiguro, and lawyers from Dentons’ London and Berlin offices.

Ilej & Partners, in cooperation with Karanovic & Partners, has advised Chiron Group on its acquisition of Croatia-based HSTEC. Buterin & Partners advised HSTEC on the deal.

The Chiron Group, headquartered in Tuttlingen, specializes in CNC vertical milling and mill-turn machining centers, as well as turnkey manufacturing solutions.

HSTEC is a Croatian company focused on the development, design, and manufacturing of high-speed motor spindles for challenging machining.

Ilej & Partners’ team included Partner Iva Tokic Culjak and Associate Antun Skansi.

Buterin & Partners’ team included Partners Valentina Kucic and Zvonimir Buterin.

This article provides an up-to-date overview of the currently existing FDI regimes in Croatia.

Legal basis

Regulation on the implementation of the EU FDI Screening Regulation (Regulation (EU) 2019/452), OJ L 79I, 21 March 2019 (“Implementing Regulation”). The Implementing Regulation entered into force on 2 October 2020.

Filing requirement

There is so far no FDI filing screening regime. However, the Implementation Regulation establishes the National Contact

Point (Nacionalna kontaktna točka) and the Interdepartmental Commission (Međuresorno povjerenstvo), which will act as a competent authority for the EU cooperation mechanism under the EU FDI Screening Regulation. The regulation does not foresee a (mandatory) screening instrument.

The National Contact Point is vested with the power to request information from a foreign investor making an investment in the Republic of Croatia or an undertaking located in the Republic of Croatia in which an FDI is planned to be made. The foreign investor or Croatian undertaking must submit the requested information to the National Contact Point within seven days of receiving the request.

The main task of the Interdepartmental Commission is to coordinate interdepartmental cooperation and efficient flow of information between state and public administration bodies involved in the implementation of the EU FDI Screening Regulation and to provide expert assistance to the National Contact Point on all issues related to it, in particular through the preparation of proposals, opinions and expert explanations.

In addition, there is a reporting duty to inform the Croatian National Bank of the investment within 30 days from the end of the month in which the investment was made (for statistical purposes).

Process and timetable

Competent authority:  National   Contact Point and Interdepartmental Commission.

Mandatory filing requirement: No screening mechanism in place.

Filing deadline: No screening mechanism in place. Responsibility for filing: No screening mechanism in place. Sanctions: N/A

FDI Screening in Austria.

FDI Screening in Bosnia & Herzegovina.

By Ana Mihaljevic, Attorney at Law in cooperation with Schoenherr

In the past decade, the tech industry in Croatia has been growing at four times the rate of the entire Croatian economy, according to research by the Croatian Chamber of Economy. Despite all the obvious positivity of its high growth, the Croatian tech scene has been facing a challenge of its own: talent gaps.

Due to rising demand for talent, individuals with specialized technology skillsets have become more selective when it comes to choosing employers. Given that employees can perform their jobs from anywhere in the world, Croatian tech employers face not only local but also global competition. Despite having a strong tech start-up scene and two unicorns, Croatia has not started producing enough highly educated tech experts, and retaining the existing ones is becoming ever more difficult. Croatia is one of the three EU member states that recently reported a decrease in the number of ICT experts. And this certainly enhances the risk of investments moving to other countries that do not have such a shortage. As even the most profitable Croatian tech employers often cannot compete with the financial benefits offered to employees in other jurisdictions, it might be time to focus on the non-material aspects.

To be clear, ping-pong tables and Mimosa Fridays are no longer enough to attract the best talent. A large part of the tech talent pool are Gen Z and care about nothing less than solving the world’s problems. A recent survey from Deloitte showed that this generation is extremely concerned about sustainability issues, with as many as 28% of respondents claiming that saving the environment is their top concern.

Besides the obvious goal to go green, companies should now also strive to achieve social sustainability.  The next generation of technology workers will consider an employer’s social impact before coming on board and are more likely to work for employers that align with their social values.

According to Croatian software company Leapbit’s recent report What do developers want, around 30% of software developers in Croatia have quit their jobs due to poor corporate culture and bad interpersonal relations. The same share of respondents found these factors to be among the top five reasons for choosing a new employer.

It should come as no surprise that positive social impact equates to higher job satisfaction, enhancing the chances of an employer attracting and retaining key talent. This requires strong and effective policies around work-life balance, as well as family-care policies, which is one of the most important job elements for over 20% of Croatian developers, according to above research.

Almost half of developers value health benefits and a flexible schedule as the most important job factors, as reported by Croatia-based online recruiting software company TalentLyft. This is a clear sign that Croatian tech companies aiming to develop knowledgeable and reliable teams should acknowledge these values and incorporate them in their business policies. Furthermore, recognizing the need for privacy can also enhance corporate reputation and boost the ESG rating. Corporations are socially and legally obligated to protect the personal information of their employees, whereas increasingly frequent data breaches have a substantial negative impact on a company’s reputation.

The costs of attracting talent are significantly lower for employers with a strong brand image, as they attract targeted candidates more easily and quickly. Companies with a poor brand image have been known to pay their employees up to 20-30% more than their competitors, as candidates don’t perceive them as desirable employers. This trend seems to be here to stay, as the post-pandemic priorities of employees are now set on social corporate responsibility and sustainable business, more than ever before.  

According to some estimates, the IT industry might soon account for a larger share of Croatia’s GDP than tourism. However, talent attraction and retention issues present a burden to this highly profitable sector of the Croatian economy. Considering the upcoming IPO of the first Croatian unicorn, Infobip, the rise of the first electric hypercar unicorn, Rimac, and the many rising start-ups in Croatia, the demand is likely to keep increasing. A sustainable approach and a healthy work environment can help employers stand out, create superior teams, and focus on their core business.

The next generation has already made it clear they want to work for organizations which contribute to the community. This is a chance for corporations to score some “S” points by showing they are going beyond the minimum legal requirements and creating a business that puts people first.

Mojmir Ostermann, Managing Partner, and Marta Jelakovic, Senior Associate, Ostermann

This Article was originally published in Issue 9.7 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

On April 28, 2022, CEE Legal Matters reported that Porobija & Spoljaric had advised Croatian tourism company Mon Perin on listing its shares on the Zagreb Stock Exchange. CEE In-House Matters spoke with Massimo Piutti President of the Management Bord at Mon Perin, to learn more about the matter.

CEEIHM: To start, please tell us a bit about Mon Perin.

Piutti: Mon Perin was founded back in 2005 as a unique project aiming at growing the local community of the Istrian town Bale through sustainable business. Founders were more than 700 local residents and friends of Bale. It was formed as a Croatian limited liability company, one of a kind in Croatia at that time with such a shareholder structure.  In the next 16 years, Mon Perin grew and went through two investment rounds that were based on the same principle of raising capital (multiple small investors instead of institutional investors), gathering more than 900 shareholders at one time. The project aimed at the listing of shares in the stock market was initiated in 2019 when the company transformed into a joint-stock company.

As for the business side, Mon Perin was envisioned from the start as a company that would develop local tourism, employ local people, and create shareholder value for local residents, friends, and the community. We took over two campsites on the coast of Bale and turned them into a luxury camping system that became a benchmark on the Istrian coast, all the while using financial sources that were in line with our vision. Prior to listing, and despite the pandemic, our EBITDA for 2021 was at 48% of our overall revenue, and we paid out dividends every year since 2012, with the exception of 2020 when the pandemic significantly shortened our season and temporarily lowered our revenue.

Post-listing, our goal is to reach the 5-star category for our local campsite, as well as to further widen our scope of services with luxury villas located in the town and the surrounding grounds, diffused hotels in form of multiple luxury apartments spread all around the historic town center and joint reception area, etc. Also, we are planning some other new and innovative offerings that will be presented during this and the next year.

CEEIHM: What is the raised capital from the listing intended for?

Piutti: We have now entered a HRK 300 million investment cycle, of which some will be financed directly from the capital raised in the last round, and some through smart debt financing. Said investment round should last until the end of next year. We have just finished placing the first 10 luxury mobile villas (120 square meters with private swimming pools) in the camp, along with tens of new “standard” 75-square meter mobile homes. Also, we expanded our “Paleo Park” outdoor swimming pool area and started on further improvements to be placed in 2023. Our goal is to fulfill all requirements to receive a 5-star camp category by that time. After that the plans are becoming even more ambitious, and, as we mentioned, they will be presented in the coming weeks and months.

CEEIHM: What was the most complex aspect of it from a legal perspective?

Piutti: The fact that the pandemic was still somewhat limiting our options. It was hard to have clear revenue plans when it was possible there would be further lockdowns or border closings, and 95% of our revenue is from foreign tourists. Because of that, the legal structure of both the investment round and the later listing had to be very flexible and ready to be applied in a very different combination of circumstances. Fortunately, even though we were ready for the worst scenario, it didn’t happen and many of the complex ideas our legal advisors had to create were not implemented.

CEEIHM: How was the work split between your in-house legal team and that of Porobija & Spoljaric?

Piutti: Porobija & Spoljaric did all the work, and we just enjoyed the results – and I am only partly joking. We are still a small company, and almost all of the legal work was handled by Porobija & Spoljaric teams – one Porobija & Spoljaric team worked on the investment round (it was not the classic IPO, but a private round for no more than 150 investors), and another worked on the Prospectus and other legal work required for the listing. We were mostly providing support in providing the information about us, preparing the financial and other data for their multi-disciplinary team, and drafting parts of the Prospectus that were tightly connected to current business data. It was a lot of work, especially as it was our first time listing, but we were glad to have real full-service support in Porobija & Spoljaric and their partners and subcontractors.

CEEIHM: And while on them, why did you choose Porobija & Spoljaric to assist you in the listing?

Piutti: They have been our trusted advisors and creators of our legal policies ever since 2006, participating in every major investment round. Their teams, especially one led by Marko Porobija, really understand us, the industry, and our needs. This time, they were able to provide us with support that went beyond purely legal work, as they created the entire legal strategy for the listing project, and executed it with our help (including drafting the Prospectus and managing the entire process with our market regulator, HANFA). They were in the driving seat all the way until our ticker appeared on the Zagreb Stock Market. Their way of providing service is modern, creative, and sometimes very innovative. Also, they are very client-centric and their customer service is of the highest level.

Originally reported by CEE In-House Matters.

Ilej & Partners, in cooperation with Karanovic & Partners, has advised Enlight Renewable Energy on the acquisition and joint development of a 525-megawatt renewable energy project portfolio in Croatia.

According to Ilej & Partners, “the portfolio comprises five projects in various stages of development, four of which are solar, totaling 386 megawatts, and a wind project of 139 megawatts.”

Israeli company Enlight Renewable Energy is a renewable energy developer and independent power producer with power plants in the US, Europe, and Israel.

The portfolio “will enable Enlight to diversify its activity in Croatia to include significant solar projects, alongside its existing operational high-quality Lukovac wind project,” Ilej & Partners informed. “The acquisition also reinforces Enlight’s already strong presence across central and eastern Europe, where the company owns a 1.2-gigawatt portfolio of renewable energy projects between Hungary, Kosovo, Serbia, and Croatia, including 316 megawatts of operational projects.”

The Ilej & Partners team included Partners Iva Tokic Culjak and Ivana Sverak and Associate Antun Skansi.

Editor’s Note: After this article was published, the Marohnic Tomek & Gjoic Law Firm announced it had advised the sellers. The firm’s team included Partner Tena Tomek and Senior Associate Ivona Zagajski.

Divjak Topic Bahtijarevic & Krka has advised Merkur Osiguranje on its acquisition of Wustenrot Zivotno Osiguranje.

The transaction remains contingent on regulatory approval.

Merkur Osiguranje is a Croatian insurance company. Wustenrot Zivotno Osiguranje is a life insurance company. 

DTB’s team included Senior Partner Mario Krka and Attorney Dominik Glavina.

DTB did not respond to our inquiry on the matter.

Despite economic forecast-related fears, there is plenty to be optimistic about in Croatia, with the country joining the eurozone and Schengen area next year, according to Divjak, Topic, Bahtijarevic & Krka Senior Partner Damir Topic.

“It is a surprisingly busy period for the legal industry in Croatia,” Topic says. “We experienced a bit of a slowdown in May, which was clearly related to the war in Ukraine. However, the situation changed rather suddenly to an extent that at the moment, we expect that we will not have a decent break in summer. The overall sentiment in Europe was that the business sector was pushing the break to understand what happens first. Still, now we feel that the situation is calming down.” Among the busiest sectors, Topic says, “driven by concerns regarding the energy supply after the cut of gas supply from Russia, there is a special interest in energy, in particular, in transactions related to hydro, solar, and wind plants.”

“As of January 1, 2023, Croatia will become a member of the eurozone,” Topic notes, adding: “Our currency – the Croatian Kuna will be replaced by the euro. This will have an interesting effect, as introducing the euro normally leads to inflation, which is already record-high in Croatia.” On top of that, as of January, next year, Croatia will also be a part of Schengen, resulting in easier travel and exchange of goods and services. “This will have a huge impact on businesses and our lives,” he explains. “Rating agencies have already lifted the credit rating of the state by two notches, meaning that we are now a decent area for investment. We feel that there are plenty of reasons to be optimistic and happy.”

Despite that, Topic points out, “everyone seems to be quite scared about the winter, considering energy prices forecasts. Yet, we are a relatively small country with a rather low demand for gas, and that, together with the access to the LNG terminal on island Krk which allows us to transport gas from anywhere in the world, is a good ground to feel optimistic about the future.” Overall, Topic adds that he doesn’t expect that crisis in Croatia will be as bad as before. “In the past, Croatia was one of the last EU countries to formally end the crisis, but this time, we expect to be the frontrunners to come out of it.”

One noteworthy recent trend, Topic notes, is the moves and spin-offs in Croatian law firms. “This is a common trend among all major Croatian firms, like in other CEE jurisdictions, but contrary to the western world where law firms are rather merging,” he says. “It could be explained by factors such as generational change or the absence of proper internal structures, but still, we all tend to struggle to maintain lawyers and face constant spin-offs.”

Other than that, Topic highlights that the Croatian parliament will be very busy after the summer break. “There are thousands of laws and bylaws, referencing Croatian Kuna as a currency, which will cease to exist in five months,” he points out. “For that reason, the legislative body is busy amending these laws to reflect the values in euros. This alone creates plenty of work for the parliament to prepare for January 1, 2023.”

EU and national associations representing companies that bring ultrafast digital connectivity in Europe – AOMR (RO), APMS (CZ), AssoTelecomunicazioni (IT), ATI (BG), DigitalES (SP), ETNO (EU), Federation Francaise des Telecoms (FR), and the GSMA Europe (EU), issued a joint statement calling for greater participation of Big Tech and OTTs in infrastructure investments and extending some telecoms regulatory requirements to OTT services.

The Associations claim that reaching the EU Digital Decade Targets (which include the roll-out of gigabit connectivity for everyone and 5G everywhere by 2030) and EU Green Deal objectives (full digitalization in order to achieve zero emissions) requires participation of the entire digital ecosystem. This would imply imposing a “fair and proportional contribution” of all players in the development of digital network infrastructures.

In this sense, the Associations request European policymakers to “promote swift policy intervention and to help ensure that big tech companies contribute their fair share to growing the EU Internet ecosystem, especially in the context of continuous data traffic increases.”

The Big Tech and OTTs, generating a lot of traffic which contributes to their business, are invited to bear some of the burden for the infrastructure.

By Ostermann & Partners

Schoenherr, working with Legance, has advised Nexi on its agreement with Privredna Banka Zagreb and Intesa Sanpaolo-controlled company PBZ Card to purchase PBZ Card’s merchant acquiring business in Croatia for EUR 180 million. Reportedly, PwC Legal and KPMG Legal advised Intesa Sanpaolo.

Founded in 1939, Nexi is a payment services provider offering merchant acquiring, card issuing, and digital banking services in Europe. The company’s services cover the entire payment chain, excluding the card scheme. It offers its acquiring and issuing services in partnerships with banks, providing point-of-sale terminals, processing or issuing services on their behalf, or directly to merchants.

Intesa Sanpaolo is an Italian banking group offering its services to 13.5 million customers via a network of more than 3,700 branches.

Schoenherr’s team included Partners Vladimir Cizek and Christoph Haid, Local Partner Ivan Einwalter, Attorneys Ana Mihaljevic and Dina Vlahov Buhin, and Associate Alan Vuckovecki.